Current international industry trends predict mid-term reductions of profitability margins for telecom operators, in particularfor mature markets. This is a result of huge investments (GSMA estimates that telecom operators will invest $1.7 trillionon capex during 2014-2020) that are required to build next-generation networks in order to satisfy the data- demandexplosion and revenue reduction caused by mobile price wars and competition from OTT.

Arthur D. Little considersnetwork-operations efficiency, optimizing existing operating and sourcing models, simplifying processes and organizations,and improving and automating tools some of the main levers necessary to face these challenges. In this viewpoint, weaddress the following questions: Which optimization opportunities in network operations can be implemented withoutcompromising service performance and customer experience? How should telco operators change their operating modelsand sourcing strategies in order to fully exploit optimization potential?

Introduction

In addition to top-line measures, telecom operators across markets are launching bottom-line initiatives to improve efficiency and reduce costs in response to increased EBITDA pressure. One of the key levers operators increasingly pursue is to rethink their make-or-buy strategies; many are already engaged in outsourcing, and others are considering and willing to do so, mainly due to the achievement of cost-savings and the desire to “eliminate the overhead” of managing complex infrastructure on a 24x7 basis. Today operators need to bring greater value and transform their operations from just opex saving centers to operational excellence, shifting the focus from “networkcentric” to “service-centric” models. Arthur D. Little has conducted a global benchmarking study covering most leading telco players in European and Middle Eastern countries to understand how operators are addressing new challenges and achieving better performance in their network operations.