The Oliver Wyman CMT Journal, Vol. 1

In the first edition of the Oliver Wyman CMT Journal, we present some of our experiences of how operators have managed the key challenges facing their organizations.

Our lead article introduces transformational steps operators can take, to not only adapt to today’s challenges but also remain flexible for continued changes in future. This “future-proofing” theme continues in subsequent articles as we explore a variety of practical approaches to areas such as efficiency improvement, data-driven decision-making and bad-debt optimization.

Endgame Efficiency Levels – and how to get there

This exhibit illustrates the cost and FTE metrics typically associated with these endgame models. As the figure shows, even when adding back the cost delta driven by “nonremovable legacy,” targets for a typical operator’s realistic endgame model fall significantly below today’s cost position even after years of previous cost-savings work. The material impact on operating costs brought about by this approach will, in our opinion, separate outperformers from underperformers in tomorrow’s telecom industry.

1How is the telecommunications business doing?

Within the last 10 years, the telecommunications business in most mature markets has gone from experiencing healthy growth to stagnation to open decline in revenues and profits. Despite an actual acceleration of growth in traffic volumes, revenues in the industry have increasingly decoupled from volumes. The situation is only getting worse as products and services become more simplified and flat-fee oriented while being subject to increased price competition from hungry players in penetration-saturated markets
2What can the telco industry do to improve topline and margins?

Many companies have deployed techniques like customer value management but with limited success. Recently, to achieve additional gains, the leading telcos have been adopting a more practical, data-driven approach that shortens the feedback cycle of analysis, action, & follow-up measurements. The approach, which focuses on seven specific business levers and is used to address a range of commercial trade-offs, has enabled companies to unlock 100–300 bps of EBITDA within four to six months, with potential gains of up to 700 bps of EBITDA over one to two years.
3What does this new approach look like?

Technically, the approaches rely on agile development and tools that can be quickly rolled out and improved on the fly, rather than classic IT development, with its long cycles, high costs and limited flexibility to evolve. Data-driven decision-making thus becomes a business reality that enables the operator to extract more value from each commercial lever, and in doing so make trade-offs across the organization. The approach enables executives to find the optimal growth path for their companies while supporting some of their key strategic decisions.