Digital transformation is a truly global phenomenon

Looking across TM Forum’s global membership, I see green shoots of growth that illustrate how forward-thinking operators are starting to reap the benefits of new digital service revenues as a result of streamlining their IT infrastructures and opening up their platforms to greater collaboration.

Take Globe Telecom, for example. It started moving its operations to the public cloud in 2016, and recently said it expects to become a digital solutions platform “over the next five to ten years”. But that is not stopping the Philippines operator from starting to clock up new digital service revenues now.

Earlier this month Globe reported in its first quarter 2022 financial results that its strategy of creating a digital service platform “has started to bear fruit, with revenues growing 252% year on year.” Globe’s subsidiaries generated a total of ₱791 million ($15.12 million) in “non-telco revenues” for the first three months of the year, from total revenues of ₱39.2 billion ($0.75 billion). Non-telco revenues still remain relatively small at around 2% of the total, but they represent a near-threefold increase in non-telco revenues on the same period in 2021. At the same time, Globe’s corporate data revenues rose 18% year-on-year to reach ₱3.9 billion for the first quarter of 2022, strengthened by sales of business application services and cloud solutions.

It is also the first quarter that “non-telco services have shown significant contribution to the topline driven by the growth across most of our subsidiaries,” according to Globe. It cites a number of digital business successes, including Adspark, its data-driven mobile advertising agency; Yondu, its enterprise IT solutions provider; and ECPay, an electronic payment service.

Vodacom, which is 60.5% owned by Vodafone Group Plc, meanwhile announced that revenues from new financial and digital services, including the Internet of Things (IoT), grew 8.5% in South Africa, and contributed R8.4 billion ($0.52 billion) or 14.4% of its service revenue in the country. Vodacom also reports that its VodaPay services platform has attracted 1.6 million registered users in South Africa since launching last October. Safaricom, a Vodafone Group associate, generated financial services revenue of R14.4 billion for the year ended 31 March 2022. By the end of the 2024 financial year, the Vodacom group aims for new digital and financial services to account for more than 25% of its services revenues.

Revenue-generating APIs

The group chief information officer at Malaysian multi-national operator Axiata, Anthony Rodrigo, a TM Forum board member, offers an excellent example of how communications service providers (CSPs) can use APIs to simplify their IT systems and create new business opportunities for customers.

Writing in the Harvard Business Review, Rodrigo recounts how Axiata realized that small businesses in Sri Lanka and Bangladesh struggled to design and promote new digital services because they lacked IT skills. So, Axiata made its network assets and data analytics capabilities available through APIs and created web-based tools and standard feature templates to allow companies with no coding skills to design online services.

Axiata also gave small businesses the opportunity to manage micropayments via mobile devices so they could serve customers without credit or bank cards. It’s an open and innovative approach to doing business that generated 90,000 services for Axiata’s customers, as well as delivering revenues of more than $100 million in 2021 for Axiata.

As Axiata illustrates, enabling the creation of a wider ecosystem by exposing network capabilities and APIs to third parties, customers and integrators, allows CSPs to form much closer relationships with enterprise customers. Our recent TM Forum report Telco to techco: capex and opex implications gives an example of how Vodafone is co-creating B2B services with a large insurance company. The companies collaborated on the development and deployment of “black boxes” in cars that transmit driver information for insurance purposes. Vodafone not only provides the connectivity to the black box, it also manufactures the boxes, delivers analytics-based reports and provides 24/7 operations support.

Vodafone, which has taken a cloud-native approach to building out and operating its digital experience layer using TM Forum Open APIs, also wants any new services it creates to be able to scale.

“It’s explicitly stated, if you do something fantastic in one of our markets and it’s not scalable you’ve done something wrong,” says Lester Thomas, Vodafone’s Chief IT Systems Architect, in the report. To this end, the Vodafone Partner Markets team has formed strategic alliances with 30 telecoms operators and groups in 48 countries, which offer a range of Vodafone products and services in their local markets.

Openness beats a killer app

These examples all illustrate how CSPs worldwide are successfully developing digital capabilities and services rather than waiting for a ‘killer app’ for 5G to magically appear. Indeed, a key difference between the 5G and 4G eras is that CSPs increasingly understand the need to open up their capabilities and create value through partnerships, not alone.

Leading CSPs are transforming their operating models, tech stacks and networks to make them agile and open enough to adapt to whatever the future holds. This future may involve orchestrating cloud-based connectivity, IoT, AI and platform ecosystems that allow partners and customers to self-provision myriad differentiated services. Or it could unfold differently.

Our industry is experiencing an unprecedented level of transformation. And even though not all TM Forum members are working at the same pace, there is consensus around the need to deliver a truly digital customer experience – including developer experience: efficient, flexible, open, underpinned by highly automated and lower-cost operating models that deliver the flexibility; ability to scale services; and the opportunity to move from vendor-supplier relationships towards partnerships that foster shared innovation.

When TM Forum’s members and partners from across the world gather again in person for Digital Transformation World (DTW) in September, it will be an important opportunity to share insights into how CSPs from all corners of the world are unlocking growth and impact by transforming their approach to technology, operating models and use of data and AI, and showcase cutting-edge solutions co-created by members through the latest Catalyst projects.

At TM Forum, our global membership of more than 700 member companies are working together to transform telco technology and operating models, enabling new revenues through platforms and partnerships. This gives us a truly global view of the transformation underway across our industry and the effort, expertise – and time – it takes to become a digital platform player. The change is happening, and not before time.