Why are CSPs undervalued?
For a CEO, success is often quantified as the market valuation of his/her company. This is especially true as well as problematic for CSPs. Vendors offering over-the-top (OTT) communications products greatly outperform CSPs although their networks provide the bandwidth which makes OTTs possible in the first place.
Concentrating on more and better bandwidth doesn’t help much: bandwidth as a standard commodity delivers ever lower margins. Reselling global OTT products doesn’t allow differentiation and here the margins can also be extremely low.
CSP Assets and the Advantages over OTTs
You’re investing heavily and regularly in key assets, such as your network, your brand and your customer relationships. Your network is regulated to ensure reliability, availability and data security, which is not the case with OTT clouds. Enterprises see you as an important local business player with a vested interest in the national economy and their own success. You are certainly closer to customers than global companies located on another continent and interested only in the largest of markets.
Monetize Assets via Individualized Communications Services
At ECT, we believe that you can best monetize these advantages by offering your own products individualized to better serve your target customers and their changing needs.
Consider the Example of BT One Phone
In FY19-20, BT One Phone reported over 37% annual revenue growth with over 50% profit.
Apropos market valuation: when BT recently decided to purchase the entire company based on independent evaluations, BT paid 97m GBP for 30% of the company, ”a valuation for the enterprise at more than 320m GBP, which BT documentation said had been determined by ‘independent valuations’.” Chris Sims, MD of Commercial & Marketing at BT and a BT One Phone director, “called out the product during a 2019 Enterprise Business Briefing as a key example of Enterprise’s progress in developing a converged services portfolio — one of the division’s top strategic priorities.” (Source: BTWatch)