Decision time for telcosīy the time the pandemic hit, the telecom industry had been managing over a decade of disruptions, driving deteriorating economics (Exhibit 1).
The current moment demands a holistic, future-back approach to transformation, in which leaders deliver on four or five bold, integrated changes to reset their organization’s DNA. The next generation of telcos will be defined by leaders who act now, risking short-term incumbency advantages to seize untapped growth. Therefore, we believe that 2021 will be a critical year for operators: a unique opportunity to fundamentally reimagine their business or, alternatively, risk another decade of decline. Our prior research has demonstrated that organizations that move early to restructure and change during times of crisis come out ahead in the subsequent decade. While telcos rose to the challenge of 2020-connecting people to work, school, family, and healthcare-the pandemic accelerated and amplified trends that were already redefining the basis for success. Over the past decade, telcos have been under continuous pressure as their traditional value pools have gradually eroded and new growth horizons have proven elusive, driving return on investment capital (ROIC) ever closer to weighted average cost of capital (WACC).
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