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Long-term benefits

In today’s wholesale telecom there are two major growth strategies:

1) Be closer to customer
2) Be closer to terminating network and play quality differentiation

Highest customer concentration is in the large cities; hence most obvious way to grow number of customers is to follow them:

• - Build out POPs close to customers
• - Acquire local start-ups with existing customer base
• - Partner with local dominant player

Traditional expansion methods are flawed

Each of the outlined strategies presumes carriers are willing to invest time and considerable resources into the expansion and exactly these resources are always in short supply. The other feature of any expansion opportunity is a risk frontloading – while carrier invests resources to expand future cash flows are very uncertain. Changes in regulatory or a shift in competition landscape may turn expected revenues upside down.

Network outsourcing is the answer

Outsourcing not only reduces upfront risk of any expansion, but it also helps to create a more agile organization. Along with time-to-market benefits and superior human capital company becomes more flexible in its market decisions as it has no “burden of old assets”, unlike competition and can also enjoy higher market valuation due to higher ROA.

Table comparing costs for Cloud-based Services and Own/Lease models.

• Overview
• Financial reasons
• Human capital
• Time to market
• Long-term benefits
• Customer profiles
• Service quality guarantee

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