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Guest View: No Service Provider is an Island – Predictions for 2014

Michal Harris, Director, Market Insight & Strategy at Amdocs | Jan. 17, 2014
Expect to see plenty of mergers and acquisitions in 2014 as the industry continues to evolve and service providers consolidate to embrace new challenges.

"No man is an island," said English poet John Donne a few hundred years ago. He was speaking about humanity, of course, but his words apply to service providers and the telecommunications market in 2014.

In the past few years, service providers have felt vulnerable, standing alone against new competitors coming to eat their lunch. As a result, many operators are searching for ways to realize the value of mergers and acquisitions to rationalize their business, consolidate their networks, integrate their offerings and better prepare for the competition.

Even many industry giants are finding that in coping with the expected trends in 2014 - such as omni-channel, big data, virtualization, small-to-medium businesses, video and TV, and connected devices - two is better than one.

"Now is the right time" for consolidation, said Deutsche Telekom AG Chief Executive Officer Rene Obermann in late November 2013, according to Bloomberg News.

He was also quoted as saying that Deutsche Telekom, one of Europe's largest service providers, is "too small in the long run for competing internationally."

Deutsche Telekom certainly isn't alone. In terms of mergers and acquisitions, 2013 was a record breaker. According to TeleGeography's M&A tracker, the total value of deals grew from U.S. $59.5 billion in 2011 to $209.7 billion in 2013. In North America, 24 million wireless subscribers migrated to a different carrier due to M&A activity. 

Why do I think this wave of consolidation will continue into 2014 across regions? Service providers will continue to merge to rationalize their businesses and to ensure growth and efficiency. They'll need to address market saturation and hyper competition, lack of resource such as spectrum and regulators pressure. Which will lead to M&A  and expansion beyond their current geographies (Vodafone, America Movil and Liberty Global are just a few good examples ). 

Integrate Channels Before Customers Switch Channel

In 2013, service providers joined the retail industry in making omni-channel a top priority. With millions of smart devices, billions of applications and unprecedented growth in data consumption, the world of omni-convergence has become all-encompassing.

Service providers have identified omni-channel (successfully integrating multiple channels) as crucial for their customer relations and management strategy, together with encouraging customers to embrace online channels (such as self service and mobile apps).  

Even greater numbers of service providers will integrate their channels and online tools in 2014 to deliver a consistent, continuous experience, enhanced by data-driven analytics. Gartner (September, 2013) predicts that by 2015, businesses without an all-channel customer engagement strategy will lose 15 -20 percent of their best customers to competitors.

It's important to note that successful omni-channel integration can't exist without a proactive relationship with customers. Service providers will incorporate a greater number of tools that will allow them to proactively notify and interact with their customers in 2014. An Amdocs consumer survey in 2013 found that subscribers are 84 percent more likely to recommend their service provider if customer care issues that impact them are proactively identified and resolved.


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