Apr 3, 2013

Launch Strategies for Digital Business Units

Among the many announcements and presentations from Mobile World Congress 2013, one that caught my attention came from Matthew Key, the CEO of Telefónica Digital.

In a post-event blog post Key highlighted how the mobile industry is moving beyond the realm of “phone calls and pure connectivity” with particular reference to M2M and mCommerce opportunities. He observed that “Despite the realization by all telcos of the need to become digital to leverage these opportunities, there is a lack of consensus on how to get there. What then is the way forward?” His own position involves “driving open partnerships and using mobile and digital technology to address pressing social needs”. Partnerships, in a variety of forms, is something I have previously described as a key aspect of business model innovation.

Stepping back, however, what are the key characteristics of other mobile operator ‘digital’ initiatives? And, what does this imply as the way forward as other operators strive to become Digital?

The following table summarizes several key attributes for different operator Digital initiatives.

Comparative Assessment of Digital Business-unit Initiatives

The common thread to these initiatives is a focus on digital services beyond core communications. Some of these are addressed from a ‘top-down’ perspective (e.g. service offerings designed around social needs in areas such as finance, health, security). Others are addressed via a ‘bottom-up’ approach involving specific new customer services (e.g. infotainment, commerce, payments).

Across the different operators, SingTel and Telefónica appear to be the more advanced in terms of the specificity of their implementation plans and launch initiatives.

In terms of strategic commitment, sizable digital-revenue goals have been outlined by Telefónica (target of €5bn by 2015 in the context of 2012 Group revenues of about €62bn) and by Telenor (aiming for NOK10bn within four years relative to 2012 Group revenues of about NOK102bn). These figures are not just a measure of ambition but also a recognition that the trend for core communications revenues will remain flat or decline over the coming years. New services are essential to offset revenue stagnation and also to establish a platform for future market and revenue opportunities.

The ultimate objective of most of these Digital initiatives is a consumer-oriented, Services Model. However individual operators are on different journeys, sometimes involving intermediate stages, to reach this goal. In particular, three strategic models are apparent:

  • Customer Services Model - Telefónica, SingTel and AT&T are striving for this category in a single execution step although the scope of their respective offerings differs.

    • Telefónica Digital aims to address a number of key social needs primarily covering financial services, advertising, content distribution, security and cloud services, eHealth and M2M, all of which have been grouped under its Digital business unit.

    • SingTel’s approach has been to prioritize the most promising ‘value and revenue pools’ to determine the service categories vital to its digital future. These encompass; video, digital advertising, games, eCommerce, advanced communications and payments.

    • AT&T has a more narrowly defined focus on automation and monitoring services for the home. One could note that AT&T’s approach has the potential to evolve over time into a ‘place-specific’ [1] strategy. This would entail a progressive expansion of its services portfolio to include new and complementary digital services specific to the home. Examples include health, wellness and assisted living services.

  • Digital Competency Model - Deutsche Telekom fits into this category with its emphasis on key competencies to manage the product delivery pipeline and portfolio of digital services. This suggests that the responsibility for marketing, delivery of digital services and revenue responsibility would fall to separate operating business units.

  • Digital Capabilities Model – Telenor begins in this category. This is because it has a near term focus to build a global back-end to connect all of its business units in order offer a consistent and effective distribution and service management platform for its digital services. Over the longer term, Telenor should transition into the Customer Services category once the deployment and marketing of digital services takes precedence. Arguably, all operators need to develop their digital capabilities and it is a matter of emphasis and timing as to how this is implemented strategically. In the case of SingTel, for example, its strategy relies on enhancements to key digital platforms; these cover: marketing and advertising, pay TV, personalized infotainment, commerce and social interaction.
Ultimately, companies that embrace the Digital strategy are likely to adopt the Customer Services Model via some mix of B2C and partner-based B2B2C business models. This provides considerable food for thought to companies that are more strongly aligned to B2B business models. How should they position themselves in respect of new digital customer market opportunities? Furthermore, can the customer services model be achieved in a single transition from today's operating mindset?

NOTE [1]‘Place’ as a strategic factor is likely to become important as the IoT market starts to develop. This is because many new concepts and service opportunities will emerge in 'places' where large numbers of unrelated devices are connected. New value propositions will result through the cross-combination of data from different connected devices and sensors. In addition to the home, other ‘place’ examples are transport hubs (e.g. airports, coach and train station concourses etc.), retail malls, hospitals etc.


  1. Feb-2014 update - Telefónica has reorganized its Digital unit under a Chief Commercial Digital Officer (CCDO) business unit. This is intended to be a single, customer-focused, go-to-market function in order to reinforce Telefónica’s strategy of becoming a 100% digital Telco


  2. June-2014 update - Telenor states in a press release that "The aim of Telenor Digital’s Global Backend is to efficiently provide a large choice of digital services, on many devices, across our geographical borders. Six out of thirteen business units can today bundle services through Global Backend".


  3. Sep-2014 Update - extract from Orange Business Services and its service offerings to enable enterprises to deal with their transition to 'digital'.

    Business VPN Internet is part of the Orange Business Services Hybrid Network strategy, which is designed to help enterprises cope with the predicted tripling of global IP traffic between 2014 and 2018. To enable their digital transformation, enterprises need to accommodate the new ways of working allowed by both VPN and Internet. They need a network that can manage different kinds of traffic and prioritize them based on importance, location, device and user.


  4. 23-Sep-2014 update - Singtel plans to invest $500m to extend its Digital Strategy.

    Singtel will invest $500 million over the next five years and hire 1,000 engineers as part of a three-pronged strategy to build strengths in cyber security, smart cities and analytics.


  5. 25-Sep-2014 update

    The trend towards 'digital' is gaining pace. Here is Luxembourg-based Millicom, with operations in Africa and Latin America, describing its transformation into a 'digital lifestyle' company and how this will boost its long term revenue mix.


  6. 2 Oct 2014 update

    Orange looks to be the latest operator to pivot to 'digital'.

    "Orange chief executive Stephane Richard announced a range of new digital services and products, including a move into the ‘connected home’ and a bigger push into mobile money, adding that the industry was at the “dawn of the era of connected objects”.


  7. 5 Nov 2014 update

    Axiata Group (Malaysia) is taking an investment approach to 'Digital' compared to its regional counterparts such as SingTel and Telenor Group, Axiata Group has set up up a US$30 million (RM100 million) venture fund with Malaysia Venture Capital Management Bhd (Mavcap). The fund that will focus on Malaysian entrepreneurs, with a particular focus on bumiputeras with about 70 per cent of the fund targeted at these largely Malay Muslims who make up about 60 per cent of the country’s population.


  8. 23 Jan 2015 update

    Orange has earmarked €20 million for an investment programme called Orange Digital Ventures which will fund start-ups “working on the new and next transformations of the telecoms and digital sectors” in all regions where the mobile operator is currently present.


  9. 24 June 2015 update

    Singtel unveils plans to grow digital business

    Singtel has plans to sharpen its focus on three key areas of its digital business to “accelerate its transformation for growth and competitiveness”. The local telco identified digital marketing, regional premium video services and advanced analytics as its main areas of growth.


  10. 1 Feb 2016 update

    It's interesting to note Telenor's digital strategy progression through this acquisition of an advertising technology.

    Telenor Group has on 29 January 2016 entered into an agreement to acquire approximately 95% of Tapad Inc., a leading marketing technology firm. The purchase price is USD 360 million, on a debt and cash-free 100% basis. The acquisition enables Telenor to take a position within the rapidly growing market for advertising technology, and secures important competence within digital marketing and analytics.

    Telenor believes that significant value can be created from applying marketing technology to improve the digital capabilities of its core telecom business.

  11. April 23 2016 update

    Interesting news from the multi-operator 'Go Ignite' innovation program; SingTel discloses its focus areas - Internet of Things (IoT), big data analytics, content delivery, cybersecurity and customer experience spaces.


    The Go Ignite programme is an initiative of Singtel Innov8, the innovation arm of Singtel, as well as the innovation arms of Deutsche Telekom, Orange and Telefónica

  12. 21 Oct 2016 update

    Etisalat launches digital services unit

    Etisalat is hoping to boost revenue by offering digital transformation services for clients in the UAE, with the launch of its "Etisalat Digital" business unit.

    It aims to help UAE-based government and corporate clients to transform their businesses by means of technologies such as cloud computing, Internet of Things, mobile applications and big data services.

    Etisalat expects the market for such digital transformation services to be worth some Dh50 billion in the next five to seven years.


  13. 27 Jan 2017 update

    Useful podcasts from Telenor Digital - re-boot or re-focus of initial efforts?


  14. 6 Feb 2017 Update

    News about DoCoMo Digital, which was launched in early 2016.


    Core proposition is based on billing and payments services.


  15. 14 Feb 2017 Update

    Telekom Austria launches digital services unit

    A1 digital to help European enterprise customers capitalise on IoT, cloud.

    The unit aims to help businesses undertake digital transformation; its initial focus areas are the IoT and cloud ICT services. A1 digital will initially go after customers based in Telekom Austria's Central and Eastern European footprint. It will also look for opportunities in new markets in Western Europe, particularly Germany.


  16. 20 March 2018 update

    Veon (formerly Vimpelcom) urges operators to follow its digital path

    Christopher Schlaeffer, the company’s chief digital officer suggested that operators were well placed to offer digital services to customers for two major reasons: the huge size of their customer bases; and the amount of data they have access to.

    “Operators, if they get their act together, have significant data. They can start with location, for example. If you know where customers are, things like taxi hailing services get a different kind of conversion rate because operators could better guess if consumers need a ride or not,” he said.


  17. 18 May 2018 update

    Singtel to focus on digital business as competition heats up


  18. 15 Nov 2018 update

    Telcos must redefine the way that they perceive themselves in order to cash in on the digital revolution, according to Telenor's chief digital officer

    "Digital transformation is twofold. The first part of it is the process of digitising your traditional business, sometimes described as digitising the core. How can we use new technologies to make ourselves better at our core business – namely our voice and data services," she said.

    "The second, and more interesting part, is where we are looking for new business models and new revenue streams to really reinvent what a telco could mean."


  19. 10 January 2019 update

    Proximus launches #shifttodigital strategy

    Proximus’ efforts to transition from a telco to digital service provider started in 2014, but “the challenging market conditions in Belgium” means pressure is on the company “to fundamentally reinvent itself”.


  20. 12 Jan 2021 update

    BT shuffles deck to focus on digital growth

    BT detailed a shake-up of its technology business with the creation of a new unit to be led by former Bharti Airtel executive Harmeen Mehta, as the company looks to boost its digital services offering.

    In a statement, BT said it was splitting its core technology business, with a new Digital unit running separately from its network technology division.

    The Digital unit will focus on developing and delivering products and services in key areas including healthcare and data, the company stated. The division will be responsible for IT, digital innovation, BT-wide business transformation and data product strategy.

    It will also look to tap into new growth areas including cloud, machine learning and AI.


  21. 1 April 2021

    Weaving a new Digital fabric for BT and our customers

    Our world is now a digital fabric.

    And every day as humans we weave new patterns into it, creating a new masterpiece every millisecond. It binds us together. It crosses seas and continents. It supports us. It drives us. It opens our eyes to new possibilities. It helps us innovate. It makes us dream. Then it helps make those dreams come true!

    Those dreams, those possibilities, are why, today, BT’s new Digital unit is born. The unit that brings together a world-class team - a team of dreamers, disruptors, data junkies and innovators. A team of digital natives. All with one mission in mind. To seize the digital threads that run across BT, and weave a new masterpiece for our customers. To dedicate themselves to build great digital experiences for everyone - our customers, our frontline, our employees. To help our businesses grow. To launch new, innovative products and platforms.


  22. 5 April 2022 update

    Cisco, Telenor Group tackle digital transformation with extended agreement

    Cisco and Telenor have signed the fourth iteration of a Joint Purpose Agreement (JPA) — first established in 2018 — to support digital transformation by addressing the digital divide, expanding services for enterprise customers and developing security solutions designed for the modern, distributed workforce. Several technologies including 5G, cloud, data analysis, IoT and Open vRAN are at the heart of the partnership.


  23. 28 Oct 2022 update

    LG Uplus unveils new AI offering as part of its digital strategy

    LG Uplus noted that the new offering is part of its long-term strategy to transform into a digital platform service provider

    LG Uplus, South Korea’s third-largest wireless operator, recently unveiled its new artificial intelligence (AI) services, local news agency Yonhap reported.

    The new offering is part of the telco’s long-term strategy to transform into a digital platform service provider.

    The new AI service, dubbed “ixi” offers AI-powered services for sports match predictions, customer call centers, small business management and content recommendations, according to the carrier.

    The AI-based service will allow sport fans to receive information of all games at the 2022 World Cup to be held in Qatar from November at the telco’s “SPORKI” platform, while LG Uplus’ Artificial Intelligence Contact Center (AICC) callbot will help local storeowners handle customer phone calls.

    Additionally, the new AI offering will help the carrier’s customers select TV series, films and variety shows based on their previous preferences and viewing records.

    “Our new brand ‘ixi’ symbolizes our ambition to change our customers’ daily lives with our AI- and data-based services,” said Hwang Kyu-byul, LG Uplus’ chief data officer. “We hope the new brand will expand our customer’s participation in our services.”

    LG Uplus had recently announced an initiative to reorganize its current and future key services under four main platform pillars centered on the themes of lifestyle, entertainment, parenting and Web 3.0. As part of this strategy, the telo aims to expand its non-telecom business portfolio to represent up to 40% of the telco’s overall sales by 2027.


  24. 9 Nov 2022 update

    Telekom delivers digitalization Made in Germany

    Deutsche Telekom will accelerate the digitalization of business. Within Telekom Deutschland (TDG), the Group is creating a new business area for end-to-end digital solutions and platforms in the growth market for digital experience services. At the same time, T-Systems – the IT division for corporate customers – is positioning itself within the Group as a vertically focused IT service provider for advisory services, cloud services and digital solutions, with security built-in. Bundled offerings of connectivity, data and applications for end-to-end digital customer experiences promise Telekom further growth, with digitalization “Made in Germany”.

    T-Systems at the core of the digital strategy

    Telekom is positioning its corporate customer arm T-Systems at the core of its digital strategy. T-Systems generates annual revenues of circa 4 billion euros. The lion's share is distributed between the two future-oriented business areas of cloud services and digital solutions, at around 85 percent. Advisory services is another key differentiating capability, supporting clients in the development of their digital strategies. Security is built into every offering.

    Under the T-Systems brand umbrella, portfolio units will be set-up in an entrepreneurial way, to fully exploit their business potential. The units are focused on scaling their businesses, addressing inefficiencies, and accelerating growth. T-Systems is also set to place more focus on partnerships, with particular focus on scaling near-shore and off-shore capabilities.

    To support T-Systems’ new entrepreneurial set-up, the Group is removing historical burdens to facilitate the company’s progress. In this way, Telekom is affording its corporate customer arm more leeway for investments. At the same time, Telekom is making T-Systems a preferred partner for the Group's own digitalization.

    Transformation laid the foundation

    T-Systems laid the foundation for its new positioning with its transformation over the past five years. During this time, T-Systems has developed from an outsourcing specialist into a leading IT Service provider with a focus on selected industries, specific markets, and vertical portfolio offerings. The segment focuses on digitalization solutions, multi-cloud, and advisory services. Security and sovereignty are key differentiators for the company and are built into every offering. T-Systems is the largest IT provider in German-speaking Europe. The company is a market leader for industries such as automotive, healthcare, public transportation, distribution, and logistics, as well as the public sector.


  25. 10 Nov 2022 update

    BT’s Division X assembles the reinforcements

    UK incumbent BT wants enterprise customers to marvel at the capabilities of its digital transformation unit.

    But in true comic-book fashion, the telco knows it can’t save the world from lacklustre digital services on its own, and so it has assembled an elite team of plucky sidekicks to help. Which is an irreverent way of saying that BT has roped in some suppliers to help its forward-thinking Division X division come up with some snazzy ideas for new services.

    Somewhat disappointingly given all the crude superhero references, it has been named the Partner Advisory Board (PAB). It was formed earlier this month and held its first meeting this week (pictured below). As well as BT, its founding members comprise Ericsson, Microsoft, IT giant Atos, and auditor PwC.

    The PAB’s origin story begins with the enterprise customer charter that BT unveiled in May. In the charter, BT pledged to offer top notch cyber security to smaller businesses, upgrade broadband lines to customers outside its fibre footprint, and be quicker to install and repair connections. It also promised to invest £100 million in Division X, which would use the money to develop new enterprise services in areas like 5G, cloud, edge, IoT and AI. As Overton said this week, he was also tasked with creating “a more structured partnership engagement that would allow us to accelerate our ambitions and co-innovate in a more coordinated way”.