Telecom groups that operate licenses in several countries generally give a great deal of autonomy to their country entities to manage their retail and wholesale activities in their domestic market; this allows them to adapt their strategy to local constraints (market conditions, regulatory constraints).
In the field of roaming and international wholesale, the autonomy left to the country entities is less justified: on the contrary, pooling the needs of the different country entities allows them to benefit from economies of scale in a market where the logic is regional and global, and to optimize internal resources. The major international groups have all set up group roaming agreements, generally quite quickly; on the other hand, the integration of the international wholesale is often less advanced, slower and more laborious; this is due to various factors:
- These large groups have been built up in stages, through takeovers, mergers and the launch of new activities, and each takeover, merger or launch reshuffles the international wholesale cards, especially when a group includes in its scope an incumbent operator that has long managed its own international wholesale activity.
- The financial stakes for each country entity, as international wholesale can represent a significant part of their revenues; this is the case in Africa, due to high call terminations for incoming international voice traffic.
- Cultural issues: fragmentation of skills and multiplicity of stakeholders.
- Technical IS and network issues, because integration requires the convergence of technical solutions, which are sometimes heterogeneous between the different entities of the same international group.
Thus, the integration of international wholesale on a group scale has financial, human and network dimensions, and it is only by proceeding in stages that such integration can be achieved.
Telefonica took years to complete integration; whereas Vodafone Group only managed to implement the integration of its international wholesale business when it bought Cable & Wireless in 2012.
Challenge
Our client is an international group, a telecom operator present in about 30 countries spread over 3 continents, and wishes to improve its operational efficiency in the field of roaming and international wholesale. The latter is particularly fragmented, because while most of the country entities are limited to the coverage of their own international1 connectivity needs, others have in addition a transit activity, which makes them complementary and/or competitors, and both customers and suppliers of each other.
The challenge for our client was to:
- Design and validate a new operational model that is more integrated and aligned with management's ambition.
- Ensure the support of all stakeholders for this change.
- Implement quick wins.
- Bring gradually new entities into the scope of the project.
- Accompany the transformation plan by providing methodology and support to the project teams so that each country entity can develop its roadmap for implementing the models once they have been validated.
- Contribute to the implementation of the various action plans for all activities
Methodology
The project was carried out in three phases:
- A first phase of designing the target operating model, with the identification of key success factors and business and financial impacts,
- A second phase of adjustment and validation of the target operational model,
- Finally, a third phase of deployment of the target model
At each phase, our team provided the client with:
- Setting up the governance and global coordination
- Elaboration of ad-hoc analyses and decision-making tools
- Adaptation of the project structure
- Animation and piloting to federate the different actors involved
Our experts have also brought their knowledge and expertise of international wholesale, and have produced and proposed:
- A common language and a common understanding of the market, its evolution, and the needs of country entities
- The target operating model, which clarifies the role of the various players, and combines integration, internalization and mutualization
- Test and transition phases for the deployment of the operational model
- Ad hoc economic studies, in particular to show the levers of value creation
- A method for setting wholesale market prices, as well as new internal pricing rules between the various group entities.
Results
At the end, our client has strengthened its market position and clarified the relationships between the different stakeholders. Subsidiaries and country units have optimized their P&L, with cost savings, improved efficiency and a better customer experience, and have a clear, reliable and attractive partner. At the group level, the client has gained better market visibility, scale effects and value.
1 This includes: the routing of international calls and messages to and from the operator's network, international IP connectivity to the global Internet for access to content located abroad, and finally the transport of signaling and roaming uses.
