For several years, traditional retail services for individual consumers were the mainstay of telecom operators? business worldwide. Operators earned most of their revenue from pure voice services offered on wireline and wireless platforms, and a significant amount of revenue from conventional text-based services. However, in recent years, fast-saturating voice markets combined with a data revolution and the entry of over-the-top (OTT) players in the telecom domain have taken a toll on operator revenues and profitability. According to industry estimates, voice and messaging revenues declined by about $1 billion per month in 2013 as compared to the preceding year. The downward slide has been continuing in the current fiscal year.
In line with this trend, all major operators in the Southeast Asian region are also facing dwindling revenues from the telephony segment. According to Frost & Sullivan, revenue from voice calls in Thailand ? the region?s largest market in terms of subscribers ? declined by 3.7 per cent on an average during 2013 over 2012. The challenge posed by OTT players has also become more pronounced in the last two years with the rising popularity of applications such as WeChat, Line, Viber and WhatsApp, which are steadily rendering traditional text messaging redundant. For example, Malaysia-based Celcom?s SMS revenue dropped by 10 per cent from MYR 631 million during January-September 2012 to MYR 568 million during the corresponding period in 2013.
In such a scenario, operators are increasingly looking beyond traditional consumer services and exploring new business segments to drive profitability and revenue growth. The enterprise service segment has emerged as a key focus area for operators, who are expanding their service portfolios to cater to the needs of enterprise customers.
The telecom needs of the enterprise market have evolved over the years, especially with the introduction of converged communications, virtualisation and new technologies such as cloud computing and machine-to-machine (M2M) services. Even small and medium enterprises (SMEs), most of which have limited resources to spend on information and communication technology (ICT), are now embracing cloud computing to better manage their operations and create cost efficiencies. The widespread adoption of such technologies has driven operators to shift from providing pure communication services towards converging their services, products and business models with those of IT vendors. Operators are upgrading their networks and developing innovative solutions to improve the quality of services for enterprises.
Exploring the enterprise space
The enterprise market offers significant growth opportunities for operators. Both multinationals as well as SMEs today are moving towards converged platforms to improve connectivity and increase the productivity of their workforce in a cost-effective manner. The adoption of mobile solutions by enterprises is growing at a rapid pace as more and more organisations empower their employees with new technologies that provide faster download speeds, advanced content, any time, anywhere connectivity, etc. There is a growing trend of professionals accessing all the ICT systems in their offices through mobile devices. This highlights the need for virtual IT infrastructure for better management, and improved access and analysis of the huge data generated on a daily basis. Operators are offering cloud services, tailor-made solutions and dedicated bandwidth pipes to enterprises. They offer services like corporate email, customer relationship management, billing, and unified communications. This helps them to earn higher ARPUs as well as leverage their network assets in a differentiated manner.
The contribution of SMEs to ICT revenues is on the upswing. According to industry estimates, in 2013, there were more than 200 million SMEs across the globe, which accounted for ICT revenues worth $211 billion. This figure is expected to reach $237 billion in the next five years and the maximum increase in revenue during this period will be seen in the emerging markets of Southeast Asia.
Operators in the Southeast Asia region are taking several initiatives and devising strategies to better cater to the enterprise segment. For instance, Telkom Indonesia plans to add 500,000 SMEs to its current base of 150,000 SME clients during 2014. In 2012, the company had introduced the Indonesia Digital Entrepreneur programme, which gives SMEs free access to a high speed internet connection and e-commerce software. More recently, it launched SME Indonesia Bisa, a marketing scheme that aims to cover 100 wholesale markets across the country by end-2014. The company plans to set up optic fibre cable networks and provide Wi-Fi and mobile broadband connections as well as ICT training skills to SMEs to enable them to market their products better.
Similarly, the enterprise unit of the Philippines-based Sun Cellular is planning to tap SMEs outside Metro Manila by offering them new business product solutions under its Solutions Distribution programme. SMEs will receive monthly commissions for selling Sun Business solutions, specifically Sun message cast and Sun M2M data plans, to their clients. Further, the Philippines-based Globe Telecom has set up an IT Enabled Services division to deliver managed cloud services to specific industries.
Telecom operators in the region are partnering with vendors or acquiring IT companies to offer cloud services. These partnerships are crucial for operators who are venturing into the cloud business for the first time. For instance, Singapore?s SingTel has acquired the IT services company, NCS, to tap the enterprise segment. Similarly, Indosat has partnered with Dimension Data to offer enterprise cloud services in Indonesia. The partnership combines Indosat?s nationwide connectivity backbone infrastructure and its 10 data centre facilities with Dimension Data?s cloud consultancy services.
The way forward
As telecom markets across the globe mature and reach saturation, moving beyond traditional voice-led communication will become critical for operators. The enterprise segment, with its huge growth and revenue potential, can provide the much-needed impetus. The segment is set to gain prominence in operator strategies and is expected to contribute about half the revenues in the coming years.
