Telenor Group CEO Sigve Brekke is heading to this year’s Mobile World Congress to talk about mobile as a force for social good, but it is a laser-like focus on digital transformation that is the top priority at the Norway-based operator in 2018.
Brekke (pictured) will be speaking at a keynote in support of the United Nations’ Sustainable Development Goals, which the GSMA is backing this year in an effort to show how telcos can help to end poverty, halt climate change and fight injustice and inequality.
“As operators, we need to be relevant to the society in which we work; it’s not just about selling connectivity,” Brekke tells European Communications. “We want to be a part of society’s growth.
“If we want to have improved regulatory frameworks, for example, we need to prove we are bringing something back.”
Charity, of course, begins at home and Brekke is pushing through a number of reforms at Telenor to put it into a position where it can deliver on the UN’s lofty ideals.
“We started 2017 with an ambitious digital transformation programme, to do with digitalising both the customer journey, between care and sales, and our core infrastructure,” Brekke says. “The impact of that has come through more quickly than we thought.”
The operator registered an 11 percent jump in EBITDA to NOK11.8 billion last year on the back of higher all-round subscriptions and heavier network traffic, while opex was cut by three percent to NOK44.7 billion thanks to cost-cutting and automation.
Both metrics outran revenues, down one percent on a reported basis but up one percent on a like-for-like basis to NOK124.8 billion, by some margin.
“The plan was to level out opex and start reducing spend from 2018. We’ve done better than that,” says Brekke.
Sixty percent of its savings are structural, and will carry forward as the company seeks a further one-to-three percent annual reduction through to 2020.
Staff numbers will reduce again, by 6,000 over three years.
Brekke describes the cuts as “unfortunate”, but reaffirms the broader programme. “We want a leaner, more agile Telenor to make sure of the best return,” he says.
As such, Telenor is addressing its own skills gap and cultural blind spots. It has trained 180 of its top brass in agile working, “to learn faster and implement quicker”, and has assembled a steering committee for its various transformation initiatives, with a direct line to the senior board.
All staff have been set a target of 40 hours training per year in new digital programmes, including in product development and applied analytics.
But the efficiency drive has many strings to its bow.
Telenor Sweden has cut the number of available price plans, from 335 to just 55, for example.
A common network and IT delivery centre in Asia, part of a broader initiative to implement operational ‘clusters’ across its regions, will deliver 20-30 percent efficiencies.
Then there are the divestments, such as its stake in VEON, while the sale of its opcos in Central and Eastern Europe remains under review following an unsolicited offer last month.
But there is a sense, surely, that all of this digitalisation and rationalisation is just the set-up before the play.
What will Telenor look like after 2020, after it has axed and automated, when 5G unleashes a new digital revolution?
“Well I don’t know what you’ll call us,” responds Brekke. “But we will still be in the connectivity business – that’s for sure.”
The pace of demand and innovation is hardly slowing down, he observes, but the group’s current programme of change is not a way to a new staging ground.
“It’s not an intermediate stage. It’s a continuous improvement. We have started that journey, and will continue beyond 2020,” the CEO says.
The point is that growth is not available to telecoms companies just through geographic expansion anymore. “That model is over,” says Brekke. “You need to create an organisation that is better prepared for the fight ahead – and not just against the mobile players, but against national and global digital players. This is just the beginning of a new way of working.”
With 5G on the lips of everyone in Barcelona, the operator community cannot afford to be gung-ho about its capital investments anymore, according to the CEO. “All of us have suffered in the last few years with increasing spectrum payments, increasing network capex, and increasing competition in the market,” he says. “Let’s not just spend a lot of money on new technologies again without the use cases in place.”
The full version of this interview can be read in the Q1 issue of European Communications. Pick up a copy at Mobile World Congress or click here to subscribe.