Asia Pacific carriers still “in the money” but danger lurks ahead

Stephen Withers
Saturday, 31 May 2008 08:41

IT Industry - Strategy

Carriers in the Asia Pacific region still make more money than their counterparts in the US and Europe, but they need to watch out! Why? The gap is getting smaller, and competition tougher!

Uh-oh... Bertrand Bitaud, mvp technology and service provider research at Gartner says service providers in Asia Pacific have gone from being much more profitable to merely more profitable, and that average profitability is gradually dropping.

So, while still making plenty of cash, carriers in the Asia Pacific are exploring various strategies in attempts to overcome this rather serious problem.

One is to act as a value leader, keeping prices the same over time, but steadily improving the quality and performance delivered. "It's a very simple message" and has proved successful in Europe, but it’s hardly what you’d call “radical”.

Another simple message is to make services free, something much more radical, as customers know they won't be able to get the service any cheaper than that. This strategy is being tried in the UK by Blyk, but it is too early to say if it will be viable, Bitaud said.

After all, making money when basic services are free means you need to be very clever – and your free services need to be top quality, or your customers will end up preferring to simply pay to get a quality basic service.

One proven strategy is that of increasing “stickiness”. The more services a customer buys from a telco, the less likely they are to churn to another carrier. One carrier that has seen benefits from this strategy is Singtel, he said. Still, the danger here is that competitors offer very similar services at better pricing, which still keeps telcos on their toes.

A focus on operations is also important, and Bitaud noted that operators in emerging markets are showing showing higher profitability.

So, how are carriers in emerging markets working together to maintain – and preferably increase – those all-important profits? Please read on to page 2.