Readers will be familiar with the technology journeys which many researchers and vendors are setting out upon, and at least as familiar with the troubled financial circumstances of many telcos. When growth is difficult at best, it’s hard to expect serious operator investment into new network capabilities, whether that’s moving past 5G, or MEC, or virtualised RAN.
Does that mean that telcos generally are going to struggle for growth? SKT announced at MWC this year that it was going to be “an AI company.” Other telcos emphasised their enterprise capabilities. So while the standards bodies and researchers are focussing on lower latency, more coverage and so on, are the telco CEOs taking their companies in entirely different directions? We saw this in the 2010s with the likes of AT&T putting money into becoming media companies and MTN investing in financial services. Only some of those gambles have paid off.
So it was with interest that 6GWorld had the good fortune recently to speak to Guillaume Boutin, CEO at Proximus Group, about his aggressive growth agenda. Boutin, CEO since 2019, has recently had his role confirmed by the board for another six years. This gives him some leeway to implement some long-term strategies.
Growth Across Borders
That said, can we really expect aggressive growth? For a Belgian-based national carrier that sounds… optimistic, as Boutin concedes.
“If I only focussed on my traditional domestic activities, my ability to grow more than a few low-single-digit numbers for the years to come would be extremely limited,” he commented.
Not only that, but building the business by investing in the network is painfully capital-intensive and, to date, has been greatly focussed upon creating cost efficiencies to cope with rising demand.
“So the idea is to create the conditions to grow for the group,” Boutin explained. “I need to find ways to create new revenue streams.”
Boutin is not your normal telecoms CEO. Starting off as an IT entrepreneur, the fifty-year-old came to Proximus Group from a role as CMO of European media powerhouse Canal+. If somebody is liable to bring a different approach from other CEOs, it’s him.
So where is Boutin going to get his growth from? An investment in Canal+? Far from it.
“Close to 30% of our existing revenues today are generated by geography where we do not own network equipment,” Boutin revealed.
Ah – so we’re looking at the group’s international roaming and financial platform BICS then, you might think. You’re getting warmer.
“It’s more than BICS, it’s a digital communications platform story,” Boutin explained.
“We’re combining BICS capabilities, Route Mobile capabilities – a company that we just bought in India – and our Telesign capabilities, which is a company in our portfolio which is specialized in digital identity.”
Between these companies, Proximus Group today is earning around 2 billion Euros. It’s not the majority of Proximus Group’s revenues; Belgium is still bringing them over 4 billion. However, “The platform play today earns close to 30% but it’s growing double digit,” Boutin commented.
He’s aiming to turn that 30% into 50% of his group revenues in the next few years; to accomplish which he’ll need effectively to double that income from abroad.
So what does that actually look like in practice? It’s all very well to talk buzzwords, but on the ground there needs to be a usable and desirable capability. Identity, roaming and so on aren’t new, and calling something a platform doesn’t make it much better. Happily, Boutin has an example at his fingertips.
“If you look at what we’re doing in India with the new Delhi Metro, travellers or commuters can buy their ticket using our engagement platform on WhatsApp. It’s a full WhatsApp journey that we provide, so they can use WhatsApp to access the payment systems of the New Delhi Metro using our platform.”
“Can a traditional telco sell an engagement platform in India with a WhatsApp-centric use case? No way.”
While Boutin is thoroughly gentlemanly, it’s possible to see where his growth agenda gets its aggression from.
“We take the territory people think they’re going to be able to play in, in five or ten years from now… So it’s a way to diversify, to prep for the future, and to learn how to use networks over the top as a platform.”
API Days
On one level this plays well into some of the trends we have seen globally, with telcos separating themselves structurally into service providers and infracos. In many ways Proximus’ international foray is a natural extension of that separation. Spectrum licenses might offer telecoms providers a unique competitive advantage in some ways, but they are also geographically limited.
Nevertheless, as the industry is keen to point out, people need a network to operate on top of; and in the past year the “next big thing” for reviving networks as a source of revenues has been the global APIs launched by the GSMA and Linux Foundation. What does Boutin make of this?
“As every operator in Europe or in the world, we are also engaging with that socialised access to network capabilities,” Boutin commented.
“When you move to the cloud, then you can start building APIs… then you can rebuild an OSS/BSS system so that you are not talking about selling SIM cards or an internet link, which is the core of our BSS system today, and you can start selling capabilities or capacity. That will happen, that will come. It’s not ready for prime time, but it will come at some point.”
So far, so good. Who doesn’t want more flexibility in the way we leverage our capabilities?
“But then of course, if you’re just providing APIs to access your network and you offer that to enterprises, what is your role as an operator? You don’t have the link to the end customer, you have a systems integrator or someone with the platform using your capabilities to resell.”
And, indeed, that seems to be how the market is already shaping up, with announcements in the last couple of months that Nokia and the Bridge Alliance in ASEAN have both launched network API platforms. We can expect to see consolidation, while companies like SAP and Oracle already have extensive developer groups who could leverage the APIs.
“So that’s why we need to take a position in that platform play, because I want to be that interface with my end customers,” Boutin noted.
“I want to be that aggregator. But before that, I need to start by creating a platform business in all geographies where I do not own networks.”
The Hard Graft
This all sounds promising, and in many ways sensible. However, we have seen the past decade or two littered by promising and sensible initiatives which haven’t gone anywhere. What makes Boutin’s plans more liable to succeed?
“At the end of the day, it’s all about execution,” he observed, and highlighted two points which the company is leveraging.
“The key differentiator that we have is that we have contractual relationships with all operators, thanks to the legacy business of BICS.”
And the second thing?
“Capital allocation. It’s not like we put a little bit of capital in that business to see whether it’s going to work or not. When you engage in such a diversification journey, you need to invest, to put skin in the game – it takes a lot of capital to develop that activity, so you need to be supported by your shareholders.”
In other words, this isn’t something Boutin is going to be able to hide in the weeds of the annual statement if it goes wrong. In many ways this is starting to sound like Boutin is effectively carving out the international side from Proximus’ national business and addressing it in the same way as his software start-up earlier in his career.
Perhaps it’s not surprising, then, that when we started talking about the main obstacles to achieving Boutin’s aims he began:
“You need to create the conditions to have a story of value creation… So you have to create the conditions to have an entrepreneurial project. You have to think a bit differently compared to the traditional operator.”
This isn’t the environment for a deep dive into those entrepreneurial conditions or how they are being established, but incentivising key staff is very different in a relatively stable telco versus a growth-oriented and software-based company. While it seems to be something more familiar to the Route Mobile and Telesign parts of Proximus (now combined in Proximus Opal) it sounds as though BICS, a decades-old part of the telecoms establishment, is also experiencing a shake-up.
As Boutin noted, “You need the right teams, the right talent and the right mindset to create a global software business. You have to create that entrepreneurial journey to attract the best talent with you to create those sorts of platforms.”
There is certainly enthusiasm and money going into this change within Proximus Group. However, ultimately much of this could be repeated by an Orange, a Jio or a T-Mobile. What gives Boutin confidence that h won’t get swamped by rivals?
“Technology? You can repeat that. But to have the knowledge of local operators, to create a contract with at least two or three operators per country worldwide – to replicate that? Good luck.”
Overall it’s refreshing to hear a telecoms leader talking about significant growth. There are two big take-aways from this that we should think about, though, as indications of the shape of the industry to come.
Firstly, the point about the cost and reward for incremental improvements in geographically-bounded telecoms networks is a huge one. We are starting to see international MVNOs and private networks supporting enterprises with global services. In many ways we could think of Proximus’ international arm as an exercise in convergent evolution with those MVNOs. The scalability and approach takes the separation of service and infrastructure to new levels. This is potentially great news for building businesses, but reflects the slowing operator demand for infrastructure upgrades. Not great for those who depend on network sales for their business.
Secondly, there is talk in the next generation about using a ‘network of networks’ to deliver services regardless of the access mechanism. By building upon existing roaming capabilities and extending them we can see some relatively straightforward ways to deliver this quickly. While standards coming through 3GPP will ultimately enable more functionality, the question of cost and time versus payoff may lead people to very different solutions.
While the telecoms industry has been conservative, it’s hard to argue that change isn’t imminent when a telco like Proximus is reshaping itself so much. Throughout the ecosystem we need to be taking note.
Image by THỌ VƯƠNG HỒNG from Pixabay
