Who will replace mobile operators and why do they need fintech services now

The widespread penetration of mobile communications, for which operators have fought for so long, has now played against them.

As the number of clients stops growing,it remains for companies to process and reconnect their own and competitive bases. At the same time, people are increasingly using the mobile Internet and watching videos from smartphones, and this requires investments in new capacities.

In such a situation, it is logical for telecom to raise pricesfor their services, but with increased competition, this may result in an outflow of customers. As a result, the average income per subscriber falls, and with it the investment attractiveness of companies. In order to maintain profitability and, in the long term, business, players are looking for new development strategies.

Operator of all trades

One such strategy is product expansion.lines by entering new markets. We are talking about the launch of additional services: online media, applications for telemedicine, work, study and sports, and especially entertainment services. It is no coincidence that the American telecom giant AT&T acquired the assets of Time Warner, a well-known entertainment content conglomerate, back in 2018.

Another promising direction foroperators has become a fintech market. Moreover, the convergence of telecom and fintech services comes from two directions: while banks are launching their virtual operators, cellular companies offer customers payment cards and other financial solutions. One of the clearest examples of such interpenetration is the French operator Orange Telecom, which opened a full-fledged bank under its brand back in 2017. The same is happening in Russia, where today all Big Four operators offer their customers their payment cards.

Thanks to this diversification, the company not onlyincrease the income from the subscriber, but also "tie" it to themselves: a person gets used to the variety of services that can be received within the framework of one application, and it becomes more and more difficult for him to leave this system.

Some ecosystems grow into superapps -applications that combine many services from different areas. The superapp model has its roots in Asia — just think of such classic examples as WeChat and AliPay. However, now their super-apps are also appearing in other regions: in Russia, Sberbank and Tinkoff Bank claim the super-app format, in Kazakhstan - Kaspi, and in 2020, its own super-app appeared in Uzbekistan - the Humans application.

Fight against obstacles

Entering new markets is never smooth andOperators face certain challenges when launching new products. Firstly, any diversification involves major changes: from the business model to frameworks in IT development. And this means that now operators have to stop thinking like a telecom company and rebuild the technological circuit.

The second is the issue of payback and return on investment.Most often, such models begin to work in profit only after a few years, and shareholders will not always put up with loss, even if temporary. As for fintech products, the situation is complicated by the distrust of users who are not ready to carry their money to a mobile operator instead of a bank. Finally, when entering new markets, telecom companies have to fight with competitors: both with independent players and with other ecosystems - in Russia, these are primarily large banks.

On the other hand, “boom” plays into the hands of telecomthe development of the payment market: more and more non-banking players are appearing in the industry, people are getting used to electronic wallets and virtual cards, and gradually the distrust of fintech services, including by telecom operators, is falling.

However, operators have other waysincrease profitability without going beyond traditional telecom services. The development of technologies and speed indicators opens up opportunities for new product solutions. One of them is related to the Internet of Things (IoT). For example, Orange Telecom offers its services in this area.

A powerful driver for the expansion of technologicaltelecom opportunities should also be the spread of 5G. With the deployment of next generation networks, operators will be able to offer their services in areas such as cloud gaming, robotics, logistics, medicine and retail.

Development features

Although there are general trends in the telecom industry, indifferent regions, the development of the industry is proceeding at its own pace. There are still markets where the penetration of smartphones and communication services is not very high, which allows us to expect rapid growth. For example, Uzbekistan is currently going through such a period, and this makes it possible to launch new projects, for example, fintech platforms and superapps. Moreover, the country is actively taking measures to accelerate the development of communications infrastructure: in particular, it is planned to introduce a number of benefits for mobile operators, for example, to reduce their tax burden. In addition, at the end of December last year, a draft was published on measures to ensure the development of a competitive environment in various areas, including the telecom industry. Among other things, the authors of the project propose to simplify the conditions for obtaining a license for the provision of mobile communications services.

A different picture emerges in European countries, wheredevelopment of telecom services is at a high level. In Germany, for example, there are more than a hundred MVNOs, so it is problematic for a new operator to enter this market. On the other hand, banking services are poorly developed in the country: there are still few neobanks and they are not very popular, while traditional banks are rather conservative. Therefore, it is better for operators who want to enter the German market to do this in conjunction with fintech services.

A bit of visionary

Long-term forecasts for the development of the telecom marketquite difficult to build. It is likely that operators will continue to build their ecosystems. It is quite possible that the telecom market will be occupied by IT giants: Apple, Google or Amazon, which will force out traditional players and divide the world of telecom and fintech services among themselves.

It has been repeatedly suggested that in the futuretelecom will turn into a free product - and this is a very real scenario. Sooner or later, communication services will lose their independent value and become only a means of access to other services of operators' ecosystems. And then the companies will earn on these additional services, "turning off" the fee for the connection itself.

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