What can Telecom operators get from Managed Services?

Facing increasing competition and commoditization from traditional telecom products, service providers are either in the process of or planning for the move to next generation, converged, network infrastructures in order to offer new, revenue-generating services.

Making this transformation can be complex and difficult. However, if done correctly, working with a managed services provider and outsourcing all or part of the next generation network planning, implementation and management, the transition to the new infrastructure can occur quickly and efficiently and with reduced risk.

I was today speaking with a close friend working in a well-known bank who was asking for some credentials of some managed-services companies in Europe. Why? Because there’s a recent interest in the investment community to bet for companies delivering technology solutions through a managed services model as it seems that these companies have weathered the current economic recession better than any other companies (across different industries) that are focused on more traditional product and support sales.

Though profits from both groups have been negatively affected by the economy in the past year, managed services providers have been better able to generate cash flow, avoid wild quarter-to-quarter fluctuations in income and generally outperform traditional technology resellers. Top managed services providers hold their profits longer even as the economy headed down; therefore, it can be thought that they will begin their recovery sooner.

EBITDA is a reasonable proxy for a company’s ability to generate cash flow. Most of our clients are demanding EBITDA improvement measures so, we are supporting different telecom mobile operators in discussing a number of options available to managed services providers – ranging from network outsourcing to network management and operations to hosted applications – with the aim of addressing the potential EBITDA benefits associated with each of these options.

But there’s a relevant remark that should be advised to anyone before getting into managed services: Companies assessing managed services and outsourcing opportunities typically focus on the benefits while overlooking the risks, often resulting in failed initiatives. We therefore suggest a methodical approach whenever analysing such an opportunity as we consider it critical to maximize the benefits and avoid the pitfalls. Case you want to know why, I suggest to take a look at the following teaser. Will help you understand our positioning. Enjoy the reading.

Best, CVA.