With telcos increasingly following the same strategies in the sector, we look back at 2021 to see where there was progress and what's ahead for the future. Fibre and 5G remain the central focus for networks, while cloud computing and cybersecurity are high on everyone's agenda. Orange was especially active in 2021 when it comes to setting up partnerships, and perhaps there are some lessons to learn. In other tips, the Polsat Plus Group took the radical new direction of making energy a third business pillar, alongside connectivity and content.
Focus points: business market, Docsis and new owner for T-Mobile NL
The Dutch telcos' strategies are converging more. It's all about modernisation (FTTP or Docsis 3.1), FMC, Wi-Fi and content (unique content or aggregator role). Also important are 5G and creating value (by extracting a dividend and/or investing in networks). Developing your own TV platform remains essential as part of offering a total FMC package. It will be some time yet before operators stop doing this and just refer customers to third-party OTT services, such as NLziet or the Canal Digitaal standalone app. Good news is that mobile ARPUs have started to recover after many years of decline.
Other specific issues for the big Dutch players include:
- KPN. Wants to bring an end to erosion on enterprise market. What will the strategy be after 2026, when the switch to fibre is largely completed? The capex budget can be much smaller, so what next then?
- VodafoneZiggo. Can it stick with Docsis technology or is there a point when the switch to fibre makes sense? Which shareholder will lead over time, Liberty Global or Vodafone?
- T-Mobile NL. Can its asset-light operating model (with no passive infrastructure) be optimised, both financially and operationally? And for the longer term, what will happen when the new owners (Apax, Warburg Pincus to close takeover in January 2022) want to sell, in 5-7 years?
- Delta Fiber. Can the company grow into the number three spot on the market? Will it make a bid for T-Mobile to fill the gap in mobile? Or could Cellnex provide the basis for leasing space and placing its own antennas?
Last year in telecoms: Orange sets the tone
Looking back at the past year on the wider European market, several other trends are worth flagging.
- Fibre companies. Several PTTs set up joint ventures, and operators such as Open Dutch Fiber were created.
- Co-investment. Challengers are investing alongside the PTT. TIM is doing this in Italy, and Swisscom has a deal with Salt (the latter is suspended for the moment due to regulatory problems with the switch from point-to-point to point-to-multipoint topology).
- Separating infrastructure. Masts, fibre and data centres were separated and (partially) sold by several companies. Telefonica did so in several countries, Vodafone created Vantage Towers and listed it on the stock market, and Orange created Totem but is not yet convinced infrastructure should be sold.
- Acquisitions. In the search for strategic assets or undervalued investments, various companies were delisted and taken private: Iliad (by its founder), Play (by Iliad) and Euskaltel (by MasMovil). Orange's attempt to buy out Orange Belgium was less successful, increasing its stake but not ending the stock market listing. Orange did succeed in acquiring Telekom Romania and Voo in Belgium.
- Copper shutdown. KPN, TIM, Telenor, Orange, Telefonica and DNA are all active here.
- E-health. A new activity embraced by operators such as Orange (JV with Sanofi, takeover of DabaDoc, accelerator started with Capgemini), Proximus (Doktr app) and Vodafone (cooperation with Deloitte).
- Responsible business with an ESG strategy was a focus point for many companies, such as Swisscom, Telia, Tele2, Vodafone, Iliad and BT.
- Energy. An important sister of internet access, with both utilities. Orange started a renewable energy partnership with Engie and Vodafone Spain is eyeing its own energy business. Poland's Polsat Plus Group took it the furthest and with an eye on the energy transition, created a renewable energy business as a third pillar alongside connectivity and content.
- Software. Just as remarkable was Finnish operator Elisa's decision to make developing software a new global business.
- Banking. Orange has been active for some time as a bank and Proximus also entered the market, in a joint venture with Belfius.
- Electric vehicle charging. Virgin Media O2 and Proximus entered this area, building on their existing infrastructure. Deutsche Telekom and its Croatian subsidiary Hrvatski Telekom have been exploring this area for some time already.
- Cloud. Orange, TIM, Deutsche Telekom and Telefonica have all started cloud ventures, targeting the push towards 'sovereign data' by governments and businesses.
- Cyber security. High on the agenda for everyone.
- Quantum computing. Orange and TIM developed their own contributions in this area.
Orange is notable for its activity on multiple fronts. The company expanded in several areas in 2021 and started various joint ventures to explore new services. Capgemini is a recurring partner, which could generate speculation of telco/IT mergers to come.
Outlook 2022: tips for other operators
Addressing some of the existing issues above remains the most important. At the same time, we highlight some other opportunities:
- The cloud and cyber security are important developments where telcos could play a bigger role, also through takeovers and cooperation agreements.
- While the Dutch operators were too early with their standalone TV apps (Knippr from T-Mobile, KPN Play), the market conditions may be getting more suitable to try a standalone TVE app again. US operators are already active here, such as Comcast's Xfinity Stream app and TV.
- Energy offers potential synergies on several fronts. While fibre operators may not be able to benefit, as their street cabinets lack the power, other operators could consider using their existing infrastructure to support electric vehicle charging networks. For the longer term, once the fibre roll-out is completed, Polsat Plus shows how the energy transition could become a new business areas for telecoms. The synergies are mainly in upselling.
- If there is a theme we can take from Orange, it's the certain convergence of telecom and IT. This is also the aim of Elisa's new software business. In addition to building a new revenue source, it has potential to increase enterprise customer stickiness, attract developer talent and further the virtualisation of the telecom industry.
