Synergies between network operators as success factor

Non-competing telecommunications companies which jointly utilise products, services, infrastructures, or know-how increase their competitiveness.

In view of worldwide challenges such as saturated markets, limited opportunities for expansion, and disintegrating boundaries in the value chain, the ICT management consultancy Detecon International considers the bundling of available forces to be essential.

According to Detecon analyses, activities for which financing would otherwise not be available - research and development are just two examples - can be conducted within the framework of operator-operator partnering (OOP).

Declining margins on mass markets and geographic regions in which two or three network operators are well established are making the creation of new business fields more difficult for telecommunications companies worldwide.

On many markets, omnipresent over-the-top players (OTP) such as Apple, Google, or Skype are adding to the pressure by offering innovative services. So scaling effects and synergies have turned into key success factors.

“The bundling of forces under a partnering agreement gives operators the opportunity to maximise learning effects and earnings made on productivity, ultimately enabling the further enhancement of competitive advantages,” emphasises Ulrike Eberhard, Managing Partner and Head of Strategic Marketing at Detecon.

Although co-operative ventures with network equipment manufacturers, device manufacturers, and Internet corporations such as Google, Apple, or Facebook have in the meantime become almost a routine element of daily business for telco operators, partnerships among telco operators themselves largely remained limited to network interconnectivity, roaming, and mobile network activities.

Yet strategically oriented operator-operator agreements can pave the way to the promotion of presence on markets without the concurrent high risks of investments and capital tie-up, for example. Depending on the development level and business model of the partners, the range of diversity for operator-operator partnering extends from unilateral access to assets and services against consideration to interactive exchange of knowledge, services, or other assets to the preparation of an acquisition.

But, if the partnering is to function and have a sustainable basis, the candidates must be analysed exactly. “Two partners at different maturity levels, for example, can guarantee higher sales for the senior partner and growth in value for the junior partner,” advises Marwan Mazraani, Senior Consultant at Detecon and expert for strategic marketing in the sector of partner selection.

His colleague Deniz Boztepe adds: “The more similar the partners, the greater their chances for success if their strengths and capabilities are complementary.” Another important point is to maintain consistent management so that the exchange does not degenerate into a burdensome series of compulsories. Balanced incentives for both partners, clear and sustained communication of benefits within the involved companies, and regular checks and management of goal achievement are only some of the pillars of functioning stakeholder management.

Read the full article from Detecon here: www.detecon.com/partnering.