Winning on the Margins

In a world marked by change and uncertainty, telecom operators have been resilient. As new technologies and competitors emerge—particularly the big-tech hyperscalers—telcos are adjusting, transforming, and seeing results: revenues are ticking higher. Yet margins haven’t kept pace. From software licensing to labor and energy, costs are up, eating into profits and putting a damper on growth.

To get margins heading north, telcos will need to continue making adjustments, but in a surgical way. They’ll need to focus on levers that cut costs and boost efficiency while keeping performance steady—and then some. It’s a crucial balancing act. But it doesn’t have to be an elusive one.

This year’s telco IT benchmark (TeBIT) study, jointly developed by ETIS—The Community for Telecom Professionals—and Boston Consulting Group, reveals that two of the most promising levers are in plain sight: sustainability and process efficiency. The survey, conducted in November 2023 and covering European operators’ IT spending and performance, finds that both are already high priorities. By reducing energy consumption, sustainability programs can reduce energy costs. By cutting process waste—creating faster, leaner, more automated journeys—efficiency projects can also cut costs. When done well, these initiatives help telcos optimize margins while delivering dividends for customers and society.

So how are telcos doing on these two fronts? TeBIT finds each initiative very much a work in progress. But the study also sheds light on where telcos are gaining ground fastest, where they should redouble their efforts, and how certain enablers—like generative AI—can accelerate the journey.

About TeBIT

A collaboration between ETIS and The Boston Consulting Group (BCG), TeBIT is a benchmarking study analysing business and technology drivers in the telecommunications industry. Many thanks to Frank Felden, Senior Partner & Managing Director - Cologne, and Thomas Krüger, Associate Director - Düsseldorf, of Boston Consulting Group for their work in realising this project.

TeBIT 2023, a survey of European operators’ IT spending and performance, was completed in November 2023 and reflects their 2022 financials and operations. The study sheds light on how participants are adapting to new trends, circumstances, and challenges—and zeros in on where telcos may want to focus their efforts. Each year, TeBIT takes a deep dive into a topic of particular interest to telcos. In previous reports, we’ve looked at the role of cloud services and the impact of COVID-19 on the industry, among other areas.