Telecoms: Creating value in a disruptive age

How to build a coherent strategy with diversification and infrastructure plays

The past several years have not been kind to the global telecom industry.

Wireless markets are saturated and fixed-line services are under pressure from cord-cutting. Competition is becoming ever more brutal and regulatory changes are becoming less predictable whilst consumers are becoming more resistant to price increases. Telecom companies are facing huge investment decisions over the next few years. Trying to be all things to all customers isn’t working for most telecom providers — or for their investors. It’s time for operators to assess their situation and make the strategic choices needed to jump-start investor interest.

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Source: Bloomberg Terminal, Strategy& analysis

Total shareholder return for leading global telecoms companies slowed between 2016 and 2018.

Total shareholder return, the share price change plus dividends, for a group of 40 telecom companies around the world over the three years from 2016 to 2018 came to just 10% in total. All of that return came in the form of dividends; share prices actually fell 3% over the period.

Telecom executives are well aware of their declining attractiveness to investors.

In the hope of reversing the trend, some operators have been looking to increase revenues and profits by diversifying into new businesses. Others, however, have been looking to double down on or restructure the company’s assets while improving results through renewed management focus and increased transparency for investors. This path can position a company for new networking-oriented revenue streams.

Only a few telecom companies have settled on a single path — or a well-designed combination. Each choice requires its own capabilities and enough investment to demand full commitment. So how can telecom operators start to create more convincing strategies?

To answer this question, it is helpful to consider the conditions under which one or the other strategy is most likely to succeed - and thus to please investors as well.

Leaders in telecom enterprises can benefit by making deliberate fact-based decisions and using them as the basis of clear stories to be told to shareholders and other constituents. This will help determine which capabilities they need to move forwards with their chosen strategies — and which they lack. And it will increase their attractiveness to investors who, at the end of the day, have many options for where to put their capital.

Contact us

Chris Bartlett

Strategy&, Partner, PwC Australia

Dan Hays

Principal, Consulting Solutions, PwC United States

Tel: +1 240 388 7187

Pierre Péladeau

Partner, PwC France

Tel: +33 06 8507 6239

Dr. Florian Gröne

Global Telecommunications Industry Leader, PwC Germany

Rolf Meakin

Partner, PwC United Kingdom

Tel: +44 7801 247667

Chady Smayra

Partner, Strategy& Middle East

Tel: +9711 211 0400

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