• Telcos around the world are transforming into ‘techcos’
• Research firm Omdia has created a benchmark to track which telcos are most successfully making the transition
• The Asia Pacific operators are leading the way, it seems
• China Mobile tops the ranking, followed by NTT and SK Telecom

China Mobile is currently the most advanced operator in terms of shifting from telco to techco, according to a new report from research house Omdia. 

Telcos across the world are striving to make the difficult and expensive transition as a matter of existential survival. Omdia created a benchmark and assessed the progress being made by 12 major operators as they try to reinvent themselves following huge investments in 5G and fibre access technologies and in the face of stagnating returns from traditional communications services. The relative positions of major telcos in the transformation league table are covered as they transmute into techcos that provide integrated communications and technology services, primarily to the enterprise sector. Matthew Reed, chief analyst for service provider strategies at Omdia, commented: “A telco that has adopted the techco model successfully is a software-based organisation that offers services in areas such as AI, big data, the cloud and IoT, and can implement digital transformation for specific vertical sectors.” 

China Mobile topped the Omdia ranking with a score of 31 points out of a maximum of 40. That is based on criteria including the scale of its high-speed broadband platform; its capabilities in AI, big data, and security; and its portfolio of enterprise digital services and vertical market solutions. Last year, the telco/techco’s revenues from new digital services, which it refers to as digital transformation revenue, increased by more than 22% and accounted for 29.4% of China Mobile’s total service revenues. 

Japan’s NTT takes second place in the table with 30 points, reflecting the Japanese operator’s strengths in software services and in the enterprise market. 

South Korea’s SK Telecom ranks third with 28.5 points, awarded for its strategy to become a global AI company and the impending international launch of A., its AI-based digital assistant. 

Spain’s Telefónica, with 27 points, ranks fourth, a position that reflects its progress as a provider of cybersecurity and other enterprise digital services through a dedicated unit, Telefónica Tech. 

Meanwhile, AT&T, e& and Vodafone all come in an equal-fifth in the scoring with 26 points each. AT&T contends that being an early adopter of AI has helped it to make operating cost savings of $6bn. Elsewhere, back in 2022, e& adopted a strategy to become a leading global technology and investment group and, since then, has followed up by acquiring or developing assets and capabilities in multiple digital service and technology areas. For its part, Vodafone has increased its focus on the business market, including enterprise digital services, and plans to expand its internet of things (IoT) operation which, as a standalone unit in partnership with Microsoft, is already the largest of its kind outside China. 

India’s remarkably successful Reliance Jio was awarded 25 points, while Orange and Deutsche Telekom both achieved a score of 24.5. The current also-rans are Axiata of Malaysia, with 20 points and South Africa’s MTN with 18.5 points. 

As Reed noted, “Overall, the operators covered in the benchmark are making good progress towards a software-based operating model and with their development of enterprise digital services, but their vertical markets focus is less advanced generally and is an area that needs more work.”

- Martyn Warwick, Editor in Chief, TelecomTV