KPMG Africa backs customer-centricity in the telecoms and convergence markets

Telecom operators worldwide are facing tough challenges as voice market growth either saturates or slows down. Strong adjacent industry competition from over-the-top brands, device companies and social media has demonstrated adequate signals to limit telecom operators’ role in the entire sector. Revenue growth from voice-based services is tapering down, with more and more customers demanding data services. Margins are under threat.

While in most African states voice is, and will continue to be, the dominant business for telecom service providers, average revenue per user (ARPU) is declining because of these challenges and enhanced competition.

KPMG has built a significant practice in the telecoms industry in Africa. Its Africa Telecom Group (ATG) is a joint venture between key KPMG member firms from Africa, Europe, the Middle East and India. Each brings specific knowledge and expertise in the telecommunications industry to the table, creating a centre of excellence that can help clients succeed in Africa.

In response to the sector’s challenges, KPMG believes customer focus is essential. “Increasingly, global organisations from services sectors such as telecoms are incorporating customer-centricity in their core business strategy,” says Johan Smith, Director and Head of KPMG ATG.

It is imperative for telecom operators in Africa, and elsewhere, to focus on the customer to sustain and grow business. They also need to leverage innovation, and introduce new products and value-added services to manage the ARPU decline and retain a prominent position in the value-chain.

During the 4th Annual Customer Retention and Profitability Summit held on July 3 – 4 in Johannesburg, KPMG experts presented their thoughts on customer-centricity, innovation and enhancing profitability.

A panel discussion with African telecom service providers, led by Jaideep Ghosh, Partner in Business Effectiveness & Strategy, KPMG in India, focused on innovation and value-added services to enhance ARPUs. The panellists agreed that value-added services are now practically part of the core proposition. Further discussion led to an agreement that telecom operators need to collaborate significantly more with ecosystem players over and above usage-based and bolt-on value-added services.

The panel also recognised the impact of social media and over-the-top contenders, and the need for telecom operators to innovate continuously to retain value. Ghosh emphasises, “Innovation needs to be institutionalised in the telecom service provider’s DNA, and has to be centred on the customer, taking into account the importance of social media.

Joaquim Ribeiro, Senior Manager in Management Consulting, KPMG in Portugal, also presented at the conference. He focused on the cost side of the profitability equation, saying, “I think we should discuss the philosophy of improved customer service but not at any cost. Cost to serve has been increasing constantly with no direct link to increasing ARPU.” The presentation sparked an interesting debate about how best to serve and retain customers while controlling the cost at a time when the cost of capital is high and shareholders are increasingly worried about the earnings before interest, taxes, depreciation and amortisation (EBITDA) margin.

KPMG has been very active in the operating expense (OPEX) and capital expenditure (CAPEX) optimisation space without losing focus on customer-centricity and core strategy.

Johan Smith summarises, “Customer-centricity is no longer a mere buzzword in the telecoms industry. It has become a business necessity to stay ahead of competition.”

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KPMG Africa backs customer-centricity in the telecoms and convergence markets