Telecom service providers should boost efforts in APAC: Ovum

Global telecoms service providers are only scratching the surface of the huge business opportunity in Asia-Pacific, and need to redouble their efforts to increase their impact, according to Ovum.

In a new report titled Global Services Deals Analysis: Second Half 2010, the independent telecoms analyst states that although global telecoms companies have begun to target Asia-Pacific in earnest, they have yet to win a significant amount of business.

David Molony, Ovum principal analyst and author of the report, said, “The big five US and European-owned global service providers have woken up to the new business opportunity the Asia-Pacific region offers them. However, while they have won their first notable contracts there, they are only scratching the surface of the market and need to raise their capabilities and support to the levels they offer in their own regions to turn that around.”

According to the report, the total value of deals announced by global telecoms providers in the second half of 2010 was $16,860 million. However, only 3% of this figure originated from Asia-Pacific.

Even market leader BT Global Services, which took 25% of the total contract value of the deals announced in the second half of 2010, had only 2% of its contracts volume in the region, Ovum said.

According to Molony, one of the reasons for the low penetration is that Asia-Pacific’s broad, diverse and fragmented market has meant that continuity of service from global providers has in the past been difficult, leading companies to turn to local suppliers.

“In effect, they have become used to using local and national suppliers, who also enjoy more regulatory protection in their markets,” he commented, “But above all, with the exception of Japan and Australia, the region has not grown as many global multinational corporations (MNCs) as America and Europe. However, that is changing, and there will be significant new demand out of the region for global telecoms service providers to target.”

Meanwhile, a lack of network infrastructure and service support in the region has also left global service providers with work to do. Molony commented, “Global service providers have made their own investments in infrastructure, and data and service centres, but capacity in these gets used up fast.”

However, Molony does believe that the global service providers that can find a way to overcome these challenges will find demand for their offerings. He added: “Asia-Pacific MNCs will continue to be a challenge for global service providers. These emerging MNCs have limited experience of what global service providers can offer them in terms of contracts, account management and new products and services.

“However, these companies are also in a hurry to grow their global business operations and reach new markets in developed territories. They will need fast-developing network and service support, which global service providers can offer them. Global service providers have solutions and skills in cloud-based network provisioning and management, which MNCs are particularly interested in.”