Story image

Vendors reaping the rewards from restructures, experts say

14 Jun 16

Restructuring continues to reap cost savings for vendors, according to the 2015 Telecom Infrastructure Services Margin Benchmark from Technology Business Research.

However, despite the cost savings enjoyed in 2015, TBR says the runway for additional margin growth is narrowing as the full impact of these initiatives is realised.

“Telecom infrastructure services (TIS) suppliers will engage in M&A for further operating leverage, as Nokia has done with Alcatel-Lucent,” explains Chris Antlitz, TBR Telecom senior analyst.

“But the key focus should be on automation, which is an area Nokia is also leading in, since this will enable vendors to extract more margin out of existing operations and create opportunities for revenue growth,” he says.

According to TBR’s benchmark, Nokia Networks remained the TIS margin leader in gross margin and operating margin among Tier 1 peers and is expected to remain the leader in 2016 post-Alcatel-Lucent merger.

“Nokia Networks has become the model among network equipment providers of how to restructure and reap optimal margin benefits from service delivery transformation,” Antlitz says.

“Rivals are also getting some margin accretion from restructuring efforts, but they are not experiencing the same magnitude of change Nokia Networks underwent,” he explains.

Antlitz says vendors continue to seek ways to balance revenue growth and margin improvement, but are struggling to increase both ends of that equation, especially with new technologies such as NFV, SDN and cloud threatening to disrupt the traditional sales model.

“TBR believes automation will address this challenge, and vendors are in the early stages of investing in cognitive computing (i.e., artificial intelligence), augmented reality, drones and other automation technologies to reduce costs while growing revenue by providing operators with more flexible services that allow for improved compliance with stricter service level agreements,” he says.

5G will propel RAN market to $160b in near future
5G growth is expected to advance at a faster pace than LTE, particularly within the APAC region.
LG takes home over 140 awards at CES
Including Engadget Best of CES Award in TV category for fifth consecutive year for the LG Signature OLED TV R.
Expert comment: Google fined US$57mil for GDPR breaches
The committee examining the breaches found two types of breaches of the GDPR.
McAfee customer choice for Cloud Access Security
“This is the second time that McAfee has been named... and we believe this demonstrates our ability to stay ahead of the pack.”
The message behind the Apple/Samsung iTunes partnership
Futuresource has released its perspective on what Samsung Smart TV’s new iTunes Movies and TV Show app means for Apple as a company.
Cybercrime could cost companies US$5.2tril over next five years – survey
New research from Accenture found that only 30% of organisations are very confident in internet security.
How healthcare can prepare for My Health Record roll-out - Proofpoint
Australia’s healthcare sector is the continent’s biggest cybercrime target, according to a July report from the Australian Information Commissioner.
Achieving cyber resilience in the telco industry - Accenture
Whether hackers are motivated by greed, or a curiosity to assess a telco’s weaknesses; the interconnected nature of the industry places it in a position of increased threat