Telecommunications requires significant capital outlay to build networks that must also be managed and maintained. In emerging economies, telcos need to be able to monetize this investment, but traditional revenue streams such as calls and data are no longer profitable.

With new tech companies and communication platforms constantly changing consumption patterns and eroding margins, the need for telcos to diversify their offerings is not just an opportunity but a pressing necessity. Telcos must innovate and diversify to create new revenue streams and ensure their profitability and survival.

Exploring New Revenue Models

To stay relevant and profitable, telcos must embrace new revenue models beyond traditional telecom services. One practical approach is offering subscription-based digital services such as content streaming, cloud storage, and cybersecurity solutions. Collaborating with entertainment providers to bundle internet plans with video and music streaming services can also drive customer retention and new revenue streams.

No Money in Traditional Models

As traditional revenue streams like phone calls and data no longer generate money, and telcos generally have all the customers they will ever need, diversifying the offering has become essential. Fintech, in particular, presents a significant opportunity for telcos to add value and revenue.

One reason for this is that many more people have smartphones than bank accounts, especially in developing countries. Telcos, therefore, already have the customer penetration that banks, particularly fintech, are searching for. They also have access to a younger market, as typically, people will have a mobile phone at a much younger age than they will a bank account, enabling telcos to get in at ground level.

The Fintech Opportunity

The integration of mobile money services, digital wallets, and micro-financing options provides telcos with an opportunity to expand into financial services. Mobile money has already demonstrated success in Africa and parts of Asia, where telcos have enabled millions of people to participate in the digital economy without traditional banking infrastructure. By partnering with fintech firms or developing in-house digital banking services, telcos can tap into this growing sector.

Moreover, telcos can explore digital lending and credit solutions by leveraging customer data and AI-driven risk assessment models. This enables them to offer microloans, buy-now-pay-later (BNPL) services, and credit score-building programs to underserved markets. By embedding financial services within their digital ecosystems, telcos can create seamless payment experiences and improve customer retention. The integration of mobile money services, digital wallets, and micro-financing options provides telcos with an opportunity to expand into financial services. Mobile money has already demonstrated success in Africa and parts of Asia, where telcos have enabled millions of people to participate in the digital economy without traditional banking infrastructure. By partnering with fintech firms or developing in-house digital banking services, telcos can tap into this growing sector.

They also have a wealth of customer data at their fingertips, which is ripe for analysis and could provide significant customer insight if used correctly, as well as many opportunities for cross-selling. For example, most telcos already have full-on eCommerce platforms—you can easily take out a mobile phone contract online or buy a phone and a range of accessories.

Telcos could leverage these platforms for a more diverse offering by selling a wider range of products or becoming more of an aggregator marketplace for other sellers. Then, there is the element of pure financial services, such as mobile phone insurance. There are numerous opportunities for telcos to branch out for additional revenue streams.

Leveraging IoT and Smart Connectivity

With the rapid growth of the Internet of Things (IoT), telcos have another lucrative avenue for expansion. Seamless connectivity is essential for smart homes, vehicles, industrial automation, and innovative city initiatives. Telcos can position themselves as the backbone of IoT networks by offering dedicated IoT connectivity solutions, device management platforms, and IoT security services. This move diversifies their portfolio and strengthens their role as critical infrastructure providers.

A Bird in the Hand

As the market penetration is saturated, telcos must retain their customers and minimize churn. A customer you already have is far more profitable than one you could potentially obtain. This means they need enticing points of differentiation besides providing the best service to ensure customers do not change providers.

This is where the power of analytics comes into play. Telcos have access to massive amounts of customer data that can be mined to deliver better customer insight and monetize them to provide additional revenue streams.

Both fintechs and eCommerce providers can use customer insights from telcos to understand better traffic patterns, spending patterns, and other trends that could deliver enormous value in driving better customer service. Converting data into meaningful insight has become a currency in a digital world, and telcos are poised to capitalize on this opportunity.

AI and Automation for Better Customer Experience

Artificial intelligence (AI) and automation can significantly improve customer experience, reduce operational costs, and increase efficiency. Chatbots, virtual assistants, and predictive analytics can provide personalized service, resolve customer issues faster, and optimize network performance. Telcos can also implement AI-driven fraud detection and cybersecurity solutions to protect customers and improve trust in their services.

Technology Foundations and Partnerships

Technology platforms lie at the heart of data analytics, but an effective transformation strategy is the key to successfully leveraging technology for innovation and diversification. A System Integrator (SI) Partner can be invaluable in assisting with this process from start to finish, from developing the strategy to providing insights and global experience into how technology can change ways of working and offer new opportunities for monetization.

In addition, an SI can help telcos increase the efficiency of current operations by streamlining existing processes and applications, from the backend to billing and CRM to activations and cancellations. This, in turn, will enhance profitability.

The customer is key. Telcos must adapt to new technology, innovate to deliver new products, services, and revenue streams, and become more agile and flexible to maintain their current customer base. An SI Partner can bring in the expertise needed to enhance current investments while helping them embrace innovation and transformation and move to the next level of maturity.

C G Selva Ganesh – VP & CEO, South Africa

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