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October 6, 2020
A number of actions have been proposed by STL Partners
New research from research institute STL Partners has called on the mobile industry to overhaul its operator business model to fully benefit from 5G.
In total the Huawei-commissioned report outlines eight strategic actions to consider implementing.
The report estimates that 5G is a great opportunity for operators to adjust their role in supporting their enterprise customers, and create $1.5 trillion in value by 2030.
STL Partners warn against using the same approach that was used with 3G and 4G as this could potentially create downward pressure on revenue and margins in mobile.
Change of approach
In order to realise the full potential of 5G a number of actions need to be implemented, according to STL.
These actions include moving from a horizontal strategy to a vertical one that offers more specific service to specific industries.
A new approach to resource allocation is crucial too, according to the research, while more spending on operating expenditure on network-independent innovation is also recommended. This number is currently less than three per cent, with a target of 14pc required by 2030.
Other actions include establishing senior management commitment to new business model activities, focusing on innovative commercial solutions and recognising that network integration with services is not essential.
The need for mergers and acquisitions is also going to be needed in order to move beyond connectivity in verticals, while organic growth is possible if specific operator and market place characteristics are present.
Control
Report author Chris Barraclough said: “The days of operators claiming they cannot change because their hands are tied by regulators or the behaviour of new competitors are over. Operators are in control of their own destinies.
“5G offers them the opportunity to redefine how they serve enterprise customers and to create new value. But management teams need to recognise that their strategies must change. And that, in turn, means investing differently. The same investment process as before will yield the same result: flat or declining revenues and margins”.