China

Details

  • Type: Business and industry issue, Press release
  • Date: 4/30/2009

Telecoms companies face the challenges of the next generation 

Hong Kong, 30 April 2009

 

Traditionally, investors tended to view telecommunications as a sector where companies could generate a steady cash-flow due to their wide subscriber base and ability to sell services for which there was a steady, predictable and growing demand from the consumer and corporate sectors.

In recent years, markets seem to have been less convinced that the industry could maintain that stable performance. Incumbent telecoms companies are being forced to adapt their business models to an environment where they are just one player in a converged IT, communications and media industry.

A new KPMG study, entitled The state of the telecoms industry in Asia Pacific, produced in conjunction with the Telecoms Research Project Corporate (TRPC), explores these challenges and the responses they are prompting from key players in the industry.
"The rising demand for bandwidth has been the most recent source of revenue growth for telecoms companies, but as prices tumble and competition increases, this is becoming a low-growth, albeit sustainable, opportunity," says Edwin Fung, partner with KPMG China and Regional leader for Communications and Media sector. "In their quest to gain competitive advantage and secure new revenue streams, telecoms companies and vendors are increasingly working hand-in-hand. The need for an ongoing close business liaison between fixed line and mobile operators, as well as vendors and content producers, will become an even stronger driver for M&A and consolidation activity in markets around the region."

KPMG's report indicates that this trend of collaboration will continue to be essential, and will determine which companies succeed. "Our new report illustrates how collaboration is occurring in different parts of Asia Pacific," Mr. Fung continues. "There are examples of both top-down and bottom-up approaches succeeding, so it really is vital to understand the local social, economic and regulatory conditions in different markets. There are also examples of partnering in the outsourcing the management of the mobile operators' networks."

The challenges facing companies are now being framed by the need to develop next-generation broadband networks, with several markets in the region now tendering for major upgrades and offering financial support to the winning bidders. The regulatory debate has moved from created competition to the need to generate effective market structures that can support the future requirements of an ever-expanding information society.

"Rapid advances in broadband transmission and routing technologies have set the entry level for new operators, putting pressure on incumbents to upgrade and leverage their wide customer base," says Professor John Ure, director of TRP Corporate. "As a result, carriers have to find ways to monetise the new service capabilities of broadband networks. Telecom companies are still grappling with business models that make sense in the world of the Internet. The positive news is that the convergence of technologies has also brought about a convergence of interests across the telecom, IT and media space, in order to make it all work."

"The CEOs of telecom companies face a profound challenge in understanding the business issues, often resulting from inefficient cost structures and legacy systems, that can hinder them in realising their new strategic goals," says David Frey, partner for Business Performance Services with KPMG China. "No organisation can succeed until it has the support and infrastructure in place to respond effectively to market and consumer-driven trends. Aligning business processes to customer centric and personalised services can involve substantial investments that cannot be overlooked, even when executives are preoccupied by their often constrained financial position."

 

- Ends -

 

About KPMG

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KPMG China has 12 offices (including KPMG Advisory (China) Limited) in Beijing, Shenyang, Qingdao, Shanghai, Nanjing, Chengdu, Hangzhou, Guangzhou, Fuzhou, Shenzhen, Hong Kong and Macau, with more than 8,500 professionals.

For media enquiries, please contact:

Nina Mehra

Senior Manager, Media Relations

KPMG China

 +852 2140 2824 (Direct)

   +852 9724 6092 (Mobile)

 nina.mehra@kpmg.com

 

 

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