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Blog Post

Digital Brands - a Telco's Strategic Tool for Growth

By Chinmay Mishra, Product Marketing Manager, Optiva • May 27, 2022

Chinmay has 13+ years of experience in strategy and marketing in telecom and technology domain. He is a technology enthusiast and evangelizes the use of data in decision making. Chinmay is an avid dog lover, who devotes time to improve the lives of four-legged furry friends.

Did you know? A telco’s digital brand typically attracts 24% of total gross adds at 50% of existing customer acquisition cost within the initial 12 months of launch.

So, with more and more service providers exploring or in the process of launching digital brands comes the question — When to launch a digital brand? Let us start with the main needs or reasons. In recent years, and especially accelerated by the digitalization effect of the coronavirus pandemic, the global telecom market has experienced many trends. Three important ones that dictate major decisions are:

1. Increased competition – Intense competition (from telco and non-telco) is continuously putting pressure on already depleted operators’ ARPU. Data is now a commodity, and service innovation is required to create more value for the customers.

Did you know? In FY’10, revenue of the top 25 global telco companies was eight times that of the top eight tech companies. By FY’20, this completely changed, and the ratio reversed to four and a half times in favor of tech companies.

2. Missing customer expectations – E-commerce, banking, and other OTT cloud-based digital services created new consumer habits. Today, digital-savvy consumers expect on-demand personalized services and care from telcos, requiring new delivery processes and capabilities.

Did you know? A western European telco gained a 5% revenue increase after developing an automated and customer-life-cycle-management campaign.

3. Accelerating technology adoption – Telcos, in general, have been laggards when it comes to adopting new technologies like cloud, analytics, and AI/ML. With heavy 5G investments, this digital transformation has become a must for survival.

Did you know? A telco in APAC can reduce 25% of BSS costs and 20% of total operational costs with digital-first technologies in a matter of two years.

In the past, service providers tried to address all of the above by transforming their entire IT organizations and service offerings. Recently, they have adopted a more agile method, “the Digital Brand.”

What Is A Digital Brand?

A digital brand targets a differentiated customer segment with an innovative digital and cost-effective value proposition that is driven by digital customer experience. To ensure the digital brand is successful and agile, it needs to be powered by digital and automated operations. A few examples from the field are:

  • Yallo by Sunrise Communications in Switzerland,

  • Orange Flex in Poland,

  • Yaqoot by Zain in Saudi Arabia, and

  • by.U by Telkomsel in Indonesia

All companies positioned their digital brands as new, fully digital value propositions distinguished from their legacy service provider offerings, with end-to-end digital customer journeys such as onboarding, acti­vation, and service.

What Role Can A Digital Brand Play?

A well-thought-out and executed digital brand can solve the challenges mentioned above and provide a path for rapid and sustainable growth and digitalization. It is a less expensive and more distributive option for digital transformation versus a whole transformation of the core business.

The following are go-to-market growth strategies for digital brands that highlight scenarios where they can work their magic.

Case 1: Growth targeting the digital-savvy customer segment

  1. Market scenario: Highly competitive, low ARPU and prepaid dominated telecom market. Voice still being the cash cow, but data showing potential.

  2. Markets that fit this scenario: African and Asian markets with a large young population and app-based mobile commerce markets that are picking up fast.

  3. Solution: Data-hungry customer segment ready to pay more for good digital services. Data-heavy monthly bundles with options to top up data and use any OTT. Give digital onboarding, self-care app, and motivation to share data with family and consume more. Combine with own OTTs and launch new services that make sense as per the region e.g., mobile wallets, games, e-education, etc.).

  4. Gain potential: A well-targeted digital brand can reduce customer acquisition cost by 50% and increase the ARPU by more than 40%.

  5. Example from the market: by.U digital brand from Telkomsel in Indonesia successfully acquired two million subscribers in just 15 months.

Case 2: Shorter and less expensive path to digitalization

  1. Market Scenario: Incumbent MNO struggling with transformation because of out-of-date and complex existing technologies and processes.

  2. Markets that fit this scenario: Established telecom markets with slow adoption of new technologies and heavy human intervention. SAARC countries, Middle East, and South American markets fit well in this scenario.

  3. Solution: Launch a born-digital adjunct brand backed by the latest technologies and digital processes. Launch like a start-up with the ability to experiment at speed and scale when needed.

  4. Gains potential: Optiva studies have shown that a public cloud migration and evergreen software with CI/CD flow of new features can save on average 50% of total cost of ownership (TCO) and expedite BSS launch time from 12 months to three months or less.

  5. Example from the market: Telcel launched five brands targeting five different segments/ businesses.

Case 3: Strategic cannibalization of specific customer segments

  1. Market Scenario: MNOs with a wide range of customer segments and a long tail of price-sensitive customers. Main brand messaging focuses on services rather than costs. Needs to align with a specific segment and offer a low-cost and self-care approach.

  2. Markets that fit this scenario: Advanced markets like Japan, South Korea, USA, Canada, and Western Europe that are struggling with low ARPU segments.

  3. Solution: Strategically move long tail low ARPU customers to a new digital brand with different messaging focused on self-care (DIY) and low cost. Keep the cost of care low with the self-care mobile app and offer prepaid contracts if required.

  4. Gains potential: Keep the low ARPU customers who might have churned. Decrease involuntary churn with monthly bundles. Protect incumbent brand messaging and free incumbent resources for high-value customers.

  5. Example from the market: KDDI strategically cannibalized price-sensitive customers with brands like UQ mobile.

Case 4: Quick counter to competition from a new entrant to the market (digital brand, MVNO, or MNO)

  1. Market Scenario: A new entrant disrupting the market with born-digital offerings and processes. Can be a new MNO, MVNO, or a digital brand.

  2. Markets that fit this scenario: Markets experiencing disruption due to MVNO related regulation, heavy competition, etc.

  3. Solution: Launch an adjunct born-digital brand to counter competition. Time to market and innovation are vital to success. Digital offerings and care, productized approach to critical systems like BSS, and process automation will be critical to delivering results in time.

  4. Gains potential: First step will be to defend market share and keep high-value customers intact. Then gain more customers from the competition with innovative offers backed by digital processes. Improved NPS, speed to market, and speed of innovation.

  5. Example from the market: In response to fierce competition in the Polish telco market, Orange launched Flex in May 2019.

For more details on Optiva’s digital brand offering, visit our digital brand page. Want to know more about Optiva’s revolutionary fast-track delivery and proven BSS that powers brands globally? Request a presentation.

Have feedback or questions for the author? Contact

Chinmay Mishra

Product Marketing Manager, Optiva


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