Simon-Kucher’s 2024 Global Telco Study identifies eight trends in portfolio innovation, customer base management, and service optimization as key growth levers.
Simon-Kucher, a leading global growth consultancy, has released its 2024 Global Telco Study*. With over 8,800 participants across 21 countries, the study provides critical insights into the evolving telco landscape and strategies for sustainable growth.
"It’s not new that telcos are swimming in a red ocean, but the environment is changing – competition is increasing, commoditization of services accelerating, and customer preferences are evolving,” said Kajetan Zwirglmaier, Simon-Kucher Partner and Global Head of Telecommunications. “To overcome these challenges, telcos should focus on building value through innovative service offerings, driving customer lifetime value, leveraging AI, and increasing efficiency in sales- and service channels.”
Key Findings:
Brand, portfolio, and pricing: The challenging market environment has negatively impacted customers’ price/value perception of telco services: < 50 percent of customers currently see them as “fairly priced”.
Telcos can address these growth levers to improve the balance between the value they deliver and the price level they charge for it:
- Brand positioning: Brands should emphasize “high speeds” and “good value for money” as unique selling points (USPs), not low price.
- Service preferences: Currently, > 50 percent of respondents prefer speed-based rate plans, but "endgame unlimited" is expected within five years.
- Service innovation: Combining popular OTT-services (e.g. Netflix) with telco-related services (e.g. cybersecurity) can improve margins and increase portfolio attractiveness.
- Price perception: The global ARPU vs. MRC gap is fifteen percent, driving customers’ “fear of missing out” on the best deals. Behavioral economics levers can help to improve price perception.
Cross-sell, up-sell, and retention levers:
Happy, loyal, paying customers are the biggest growth lever for telco companies. Customer satisfaction should be the foundation to drive sustainable customer lifetime value development.
- Customer loyalty: One-third of customers are considering switching providers. Understanding customer segments (CLTV vs. churn risk) and proactive retention can reduce churn by over 20 percent for long-term customers (those that stay with the same provider for more than five years).
- Fixed-mobile / Mobile-media convergence (FMC / MMC): There’s significant convergence growth potential in the 50% of households not already converged. Research shows “locking-in” customers only works in ~40 percent of countries, but FMC and MMC can drive 25 percent higher ARPUs compared to unconverged customers.
Sales and service enablers:
To reduce sales and service costs, telcos need to address the right optimization levers to drive automatization and growth in the fiber expansion.
- Sales channel digitalization: Only ~60 percent of customers contact service, and just~40 percent of service incidents are resolved on the first contact.
- Fiber expansion: Rising costs and plateauing take-up rated challenge fiber-expansion. New market entrants will further fuel overbuild and ARPU dilution.
Zwirglmaier adds, “The implications of our findings are clear: telcos need to rethink their approach to pricing and service delivery. By prioritizing customer satisfaction and portfolio innovation, they can build customer lifetime value and differentiate themselves in a crowded market, ultimately driving long-term growth.”
Complete study findings are available upon request.
*About the Study: The Global Telecommunications Study 2024 was conducted in May 2024 by Simon-Kucher. The study surveyed over 8,800 consumers across 21 countries (Austria, Belgium, Denmark, France, Germany, Italy, Japan, Mexico, Netherlands, Norway, Poland, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, UAE, UK, USA), including representative quotas for age, gender, living area, education level, employment status & income level.