Scale matters: Why being part of a telco group outgrows being a stand-alone

Interview with CMO Rickard Widerberg

Telco’s roaming business has taken a huge hit due to Covid-19 and the speed of recovery as well as the longer-term effects seem challenging.  How has Telenor managed in these uncertain times?

As with many players in the industry, also Telenor has been affected with substantially reduced roaming volumes due to travel limitations. In some markets, we have seen a decline of up to 90% due to COVID-19. First now, we see some recovery of volumes. But the progress is still slow and there is a high uncertainty of future development of when travel will be possible and to what degree.

The pandemic very well demonstrated the huge advantage of being sizable and coordinated as a telco group. Throughout the last year, our dedicated team of roaming experts renegotiated hundreds of deals to secure a lower cost, in line with the reduction of roaming volume. Being proactive and in close dialog with our partners has been key during this process. In addition, we continued to develop and enhance capabilities within Roaming Quality, IoT & 5G technologies to enable our MNOs to be frontrunners in their markets as soon as the lock-downs ease off.

For some time, Telenor Global Services has been offering the service Managed Roaming to MNOs . What are the benefits for potential new MNOs, especially now with low volumes due COVID-19?

Already long before the pandemic hit us, we have seen that many medium sized MNOs struggle in the market. Why? In order to survive in today’s Roaming world, there is no doubt – you need scale. The bigger the scale the better. Scale gives you an advantage in negotiations – affecting both rates and deals. Scale reduces cost and puts you in a position to do more aggressive retail campaigns, which ultimately benefits the end users. So, you could say that COVID-19 even further increased the rationale to be part of a groups’ scale and coordinated approach, because the Roaming business is very much depending on scale.

Why can we be so sure about these benefits of a full end-to-end Managed Roaming offering? 

Experience. We have done it ourselves, transforming from many stand-alone Telenor MNOs to one centralized Group. Five years back, all our Telenor affiliates were doing roaming negotiations, service openings, etc. for themselves. Then we joint forces and centralized all roaming in the Telenor Group to Telenor Global Services. It was a game changer and we saw immediate effect, one of them being considerably reduction of cost, but we also experience that we can be much more aggressive on the retail side. As example of proof: In the assessment together with several smaller MNO´s in different regions, we have seen that Telenor can provide 50-90% cost reduction for the MNO´s.

Looking ahead, what do you consider being the main challenges & opportunities post Covid-19 within roaming?

Most of the new challenges and opportunities for roaming ahead is related to IoT and 5G. We have already started to enable roaming on newer technologies such as LTE-M, NB-IoT & 5G. To secure global footprint on these, newer roaming services are imperative for our MNOs to win end customers and boost retail revenues. IoT wholesale roaming will also move towards a new business model including a fixed fee per SIM/device, compared to traditional only usage-based business models. Reason being IoT in many applications uses very small amount of data. This will of course require new charging and billing capabilities and adds more complexity around negotiations.

In addition, enhancing our MNOs footprint on Voice over LTE (VoLTE) and existing technologies such as LTE, still need to continue. You could say the efforts are 3-4 folded the coming years and we need to work even smarter and be even more coordinated as a Group.

In Telenor, we exist to empower societies by connecting our customers to what matters most. Offering the opportunity to outsource international services to us, we enable small and medium players the chance to get a seat at the table and helping them into a position to compete in their market.

 

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