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How to make money from digital services

February 26, 2020 - Martin Morgan

Digital transformation is starting to pay dividends for service providers who have embraced offering digital services and content. Here we have a look at the 2019 results of Turkcell and see how digital is driving company performance and bottom line results.

In September 2018, Openet ran a blog called ‘The Telco Strikes Back’. In 2016 to 2018 many telcos had their backs to the wall. Many were watching as their core product, data, was becoming a commodity. They also were being told to be more like Google and Facebook. While many telcos were pushing content services and had started investing in digital transformation it was fair to say that they were dark days for many telcos.

As discussed in The Telco Strikes Back blog, Turkcell, who had made an investment in content services saw that the strategy of digital transformation was starting to pay dividends. Revenue, EBITDA, ARPU and NPS were all up and churn was down.

So far so good, but how would this strategy play out in the longer term?

Fast forward 17 months, and Turkcell have just announced their Q4 and 2019 results. The results are impressive and show real benefits of investing in strategy of transforming to become a digital service provider.

Headlines are:

Revenue – 18.1% year on year increase

EBITDA – 18.6% increase

ARPU – 17.7% increase (2x sector average)

Mobile Data Usage – 53% increase in average subscriber data usage

Post-paid net adds – 1.5M (record figure for Turkcell in the last decade)

Turkcell has stated that digital services are one of their strategic focus areas. They offer services including cloud storage, music, TV, digital publishing and instant messaging. Looking at the results above it would seem that these services are getting results. New customers, data usage, ARPU and revenues are all heading the right way.

Light Reading reported that Murat Erkan, the CEO of Turkcell, highlighted the importance of personalisation in order to grow the business. He said “analysis of big data and use of AI with our advanced analytical capabilities enable us to make the right offer to the right customer at the right time. In our telecom business, which we manage with a micro-segment approach, we can diversify our offers and extend dynamic pricing.”

The use of real-time data, with offer catalogs to trigger context-aware offers has been with us for some time now. The oldest example probably being roaming service passes. But it’s good to see a CEO of a digital service provider call out the mantra of the ‘right offer, to the right customer, at the right time’ and use this to market a wide range of digital services.

Turkcell is also taking personalisation one step further. They are looking at using “AI-enabled personalised content on Dergilik (digital publishing), fizy (music) and TV+ platforms, while also entering into advertising collaborations”

Personalised content and advertising within this content can help increase revenues and usage by the very fact that it’s personalised and relevant. As well as investing in digital services for consumers, Turkcell are also entering into the business market. Their ‘Digital Business Service’ offerings have seen them become one of the top 3 IT solution providers in Turkey. Their payments business is also going well with their Payfin card enjoying a 3x increase in number of users.

Being able to diversify and quickly roll out new digital services is paying dividends for Turkcell. Underpinning this success is the ability to make the right offer to the right customer at the right time. Which as anyone will tell you needs real-time data.

 

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