Telecoms operators around the world are facing increasing difficulties. Their traditional sources of revenue and profit are drying up. The markets for voice, messaging, and fixed broadband are almost saturated. In the UAE, for example, the regulators say there are nearly twice as many mobile subscribers as people, the highest such rate globally.
To make matters worse, margins are narrowing. Operators' high-value customers can easily find better deals and faster data speeds. Customers want more data. In the United States last year consumers for the first time spent more money on buying data than on traditonal voice services - forcing companies to invest heavily in extra capacity and new technology. Operators are also investing to fend off competition from internet players such as Google, Skype and Facebook.
Many operators have responded with cost reductions. Some are across-the-board. Others involve deep cuts in customer service centres and field operations. The danger is that firms may thwart any chance of sustainable growth by cutting costs that are worth having along with spending that isn't.
A better approach is for operators to define their priorities then take three broader reinforcing measures. These are to cultivate and invest in the requisite capabilities to implement the priorities, divest other capabilities and reorganise within this new capability set. These steps can shrink the cost base by 25 per cent and prepare the operator for growth. Defining priorities means choosing a "way to play". This leverages the capabilities that make the operator different and matches the operator's internal strengths to attainable market opportunities. These capabilities should be distinct to make it difficult for any competitor to copy them. One "way to play" is to be an experience player offering a wide range of innovative products and services that provide a top-class customer experience.
Deciding what type of operator to be determines the next three measures. First, it identifies which capabilities need investment, and which need slimming down or cutting. Experienced players have to put resources into superlative customer service that keeps customers and sells them more products and services.
Customers' every contact with experienced players has to be professional, high quality, but not necessarily costly. Customised apps can be as significant in providing such quality service as highly trained and easily contactable customer service staff. Second, operators have to transform their cost structure, which involves understanding the connection between costs and growth. As costs are related to capabilities, operators can categorise them as essential, competitive necessities, routine business capabilities, or not required.
Operators can eliminate or spend very little on capabilities they do not need. For example, connectivity players need to be leaders in network technology and coverage, while being competitive on costs. Connectivity players do not require the capability to customise handsets, which they can divest entirely. They can also increase their efficiency in customer experience, which is a competitive necessity. For example, connectivity players can sell online and have a few high-profile outlets instead of building an expensive chain of shops.
By contrast, network technology is less important for experience players, not ranking as an essential capability. Experience players can reduce network investment costs, which tend to be substantial. They can move to best-in-class cost levels by sharing their networks with other operators, thereby freeing up resources for innovation.
The third element is reorganisation. Unlike previous organisational changes, which disrupt and create little value, this form of reorganisation sustains the cost reductions needed for growth. This is achieved through less management overhead and having business functions pool resources.
Operators' organisation charts can be rearranged to manage work more effectively and efficiently. For example, experience players can move all innovation-related functions under a single overarching unit. Reorganisation can also stimulate growth by empowering managers to act like owners of the business.
Getting rid of certain capabilities is not a one-off dumping of ballast. Nor is reducing resources for non-differentiating capabilities just another cost-cutting technique, of which operators already have plenty.
Rather the point is to make spending deliberate, linked to capabilities, and continually in search of the lowest cost operations. By doing this routinely, as part of the daily way they do business, telecoms operators can position themselves for growth.
Karim Sabbagh is a senior partner and Chady Smayra a principal at Booz & Company
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Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
BIO
Favourite holiday destination: Turkey - because the government look after animals so well there.
Favourite film: I love scary movies. I have so many favourites but The Ring stands out.
Favourite book: The Lord of the Rings. I didn’t like the movies but I loved the books.
Favourite colour: Black.
Favourite music: Hard rock. I actually also perform as a rock DJ in Dubai.
The Cockroach
(Vintage)
Ian McEwan
Emergency phone numbers in the UAE
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
The Bloomberg Billionaire Index in full
1 Jeff Bezos $140 billion
2 Bill Gates $98.3 billion
3 Bernard Arnault $83.1 billion
4 Warren Buffett $83 billion
5 Amancio Ortega $67.9 billion
6 Mark Zuckerberg $67.3 billion
7 Larry Page $56.8 billion
8 Larry Ellison $56.1 billion
9 Sergey Brin $55.2 billion
10 Carlos Slim $55.2 billion
MATCH INFO
Fixture: Thailand v UAE, Tuesday, 4pm (UAE)
TV: Abu Dhabi Sports
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Company%20profile
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What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Emergency
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UAE currency: the story behind the money in your pockets
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Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
RESULT
Valencia 3
Kevin Gameiro 21', 51'
Ferran Torres 67'
Atlanta 4
Josip Llicic 3' (P), 43' (P), 71', 82'
