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Between the hammer and the anvil: telcos B2B hopes and dreams 1Q25 ed
18 Plays13 days ago
What are recent telcos' results telling us about the B2B space? what is hot, tepid and cold? Is the whole world playing the same game?
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Transcript
What's on today's podcast?
00:00:12
Pablo Tomasi
Hello, everyone, and welcome back to the Satura Strategies podcast series ah called the Telco Drift. Now, today we will discuss what recent Telco's results are telling us about the B2B space where they operate.
00:00:28
Pablo Tomasi
um We will learn you know what is hot, what is tepid, what is cold, will look at some of the differences, for instance, between the Northam and the European region. technical strategies and sort of how bullish they are for these in new technologies.
00:00:44
Pablo Tomasi
Now for those that that are new to this channel, I'm Pablo and I'm the founder of Satura Strategies, we're like a boutique analyst firm. So without any further ado, let's get
Analysis of Q1 2025 Telco Results
00:00:56
Pablo Tomasi
into it.
00:00:56
Pablo Tomasi
First of all, um you know i had to get the chance to look at a few of the 1Q 2025 results from from different telcos. um And i what I try to do is like try to kind of get a pulse of where is their attention, what are they highlighting, what are they not really disclosing, and what they...
00:01:20
Pablo Tomasi
they think are going to be like the key drivers for them in the sort of the short or long term. So like let's get started by discussing what is hot, what is tepid what is cold. Now, first of all, what is HOT?
00:01:31
Pablo Tomasi
100% rationalization of their B2B enterprise units and efforts. And we've seen that as a sort of a process that has started, it's actually started like a long time ago.
00:01:44
Pablo Tomasi
But you know if you're looking at what BT Global is doing, if you're looking at what Orange Business is doing, you can clearly see that there has been that you know rationalization in terms of the different products.
00:01:56
Pablo Tomasi
that the the company wants to offer and wants to keep offering now and in the longer term but also you know which markets you know do telcos between units really want to operate i think probably again bt global is the is the prime example like okay we're going back to our roots we're going back to the United Kingdom and that's going to be sort of our centerpiece so that idea of like okay you so far we have almost tried a lot of different things to see what was working and what was not.
00:02:25
Pablo Tomasi
um And now we're rationalizing a little bit of
Exploring Private Networks and 5G network slicing
00:02:28
Pablo Tomasi
effort. That is definitely something that you know I believe is really hot right now. What is Tepid? So what is like sort of few people are highlighting it, but a few people are kind of ignoring it. And for me, you have those opportunities such as private networks, but also the whole 5G SA or even 5G advanced conversation that is sort of in between.
00:02:49
Pablo Tomasi
and And I call them sort of tepid areas for tech because you have some people that are like extremely bullish. And and I'm going to touch on that later on. ah For instance, private networks, and that would be a good example. It says Verizon.
00:03:02
Pablo Tomasi
But then you have other people that are really not paying a lot of attention to this market, ah at least, again, from a Q1 discussion perspective. ah So definitely something in between. would like, obviously, to see a little bit more attention on these sort of potential growth areas if they are perceived as growth areas.
00:03:21
Pablo Tomasi
Now, what
The Role of Network APIs and AI in Telco
00:03:22
Pablo Tomasi
is cold? So what what are some of the areas that really, for all the hype and for all the you know the talks that we do from an industry analyst point of view are not really reflected ah within these results.
00:03:36
Pablo Tomasi
And would say network APIs is kind of kept low key for a lot of people. Now, yeah it's kind of almost half mentioned, if you want, by by certain telcos But ah I think right now it seems that Part of this grandeur door of the idea has a little bit of cool down.
00:03:55
Pablo Tomasi
and And the other aspects which i would categorize as cold within Q1 results is AI. And I would categorize that as cold because ah actual AI launches or services for the enterprise There haven't really been a lot and a lot of the talks about AI right now from those results were very very generic yeah very very generic in terms.
00:04:20
Pablo Tomasi
And again, I think that that is kind of shows the state of the market where there is the hype, there is the market and then there's like, okay, this is what we're actually doing day in and day out. This is what we expect is going to be driving our market forward.
00:04:34
Pablo Tomasi
Now,
Future Opportunities: Network Slicing and Regional Differences
00:04:35
Pablo Tomasi
let's focus a little bit more on network slicing and private networks because it's the easiest thing. for me to do to to analyze very quickly. Now, network slicing, it hasn't been mentioned in the hot tepid or cold, but it would be like extremely cold in a sense that very few telcos are actually talking about network slicing, ah very few telcos are talking about monetizing this opportunity in their quarterly results.
00:05:00
Pablo Tomasi
and And that kind of shows that this is still a very early market. Now, there is one notable example, and that is T-Mobile US. We know that they launched a few network slicing proposition, and particularly T-Priority has gotten a lot of attention.
00:05:16
Pablo Tomasi
ah So they are flexing their muscle a little bit. And that potentially also goes back in terms of what they want to showcase as technological leadership. So they have their 5G SA network that is deployed, and therefore they can do this type of more advanced offerings.
00:05:33
Pablo Tomasi
um So they they they are like, effectively flexing their muscles and saying, we can do the network slicing. And know we are pushing the boundaries in that, which is really good to see. Now, of course, we know that after T-Mobile announced T-Priority, few months later, Verizon also announced a network slicing offering. So we're going to see a lot more of these chess games between ah different telcos launching different competing services.
00:05:59
Pablo Tomasi
And at the end of the day, so to the bottom line is going to be that not all network slicing are equal. and while everything categorized under the network slicing idea what is actually included and how is delivered is going to be fairly different i believe from from different telcos um but most you know operators results that ah that i yeah had a look at they they didn't mention network slicing and and yeah you can argue that some people still don't have 5g sa uh some markets possibly do not have such clear scenarios as so the first responders markets in the US to really make it easier for a company to to launch network slicing proposition.
00:06:42
Pablo Tomasi
but But we'll see how this develops. I'm expecting over the the the next few quarters a little bit more of activities. Now, on the private network side, so it effectively the two markets are kind of overlapping, right?
00:06:55
Pablo Tomasi
And the big difference for me is going to be that some people are going to be pushing from a fully dedicated network first approach, and others are going to be pushing from kind of a slicing or hybrid first, and then fully dedicated.
00:07:13
Pablo Tomasi
But even looking just at the private networks per se, ah you have Verizon has been over the last few years probably the telco that is the most aggressive in terms of saying, okay, this is for us is a big ah big opportunity.
00:07:28
Pablo Tomasi
And they did mention that they got a few new deals on the private network side, ah ah besides Verizon, Vodafone has mentioned that um it is an opportunity. And there's also going to be a webinar from Vodafone, I think, in a couple of weeks.
00:07:47
Pablo Tomasi
Hopefully by by that time, ah i um I will have already published this, ah which kind of shows how the company is focusing on the market. but again It doesn't seem to be one of those opportunities that everyone is like really excited about and that everyone is really pursuing at the moment.
Comparative Analysis of Telco Environments
00:08:05
Pablo Tomasi
um and And I think this is a fair representation of how the telco's involvement with private network is still a little bit a little bit patchy.
00:08:16
Pablo Tomasi
there is There are still a lot of questions that that needs to be to be answered, to be fair. And while I expect lot more talks about network slicing going forward, i do not expect a lot more talks about private networks, again, within the setting of quarterly results coming from telcos.
00:08:36
Pablo Tomasi
So switching from sort of a solution point of view now a little bit more on a regional perspective, ah I think there is something quite interesting here. Because when you look at North America,
00:08:49
Pablo Tomasi
ah you see those that I would define as legacy services, so the fixed connectivity or the mobile connectivity, still being a driver for growth. And this is, you can see from AT&T, T-Mobile, Verizon.
00:09:03
Pablo Tomasi
Clearly, that is still an opportunity. That is an engine. And I think it's interesting because... On the back of that growth, on the back of that sort of business that is familiar ah for the telco, then those telcos are going to be able to risk it a little bit more, provide something different on top of that sort of basic growth engine.
00:09:26
Pablo Tomasi
Now, you look at Europe, you have like a very, very different ah a different environment in the sense that ah if you take Orange Business, for instance, you know they have been mentioned that sort of fixed services and even mobiles have been declining.
00:09:42
Pablo Tomasi
So that basic connectivity doesn't really seem to be good enough ah for for a lot of the European telcos. um And that creates a slightly different environment, because in the moment when you don't have that sort of stable growth engine, any single bet that you're making from now going forward, it really needs to accelerate at a faster rate than the decreasing legacy.
00:10:08
Pablo Tomasi
offerings you want and and that is quite different. Now from a revenues point of view as well, if you look at Europe, you're seeing some companies decreasing revenues and again BT Global, Orange Business, some companies increasing the revenues, again talking about the B2B side of of things and that would be Telefonica. Telefonica
00:10:28
Pablo Tomasi
it it is very much a mixed scenario. Overall in Europe, Pretty much all the older major telecos, they do have what you can consider as specialist SI arm, or at least the ambition to drive more into that total SI and consulting.
00:10:46
Pablo Tomasi
I mean, Orange, Deutsche Telekom, Telefonica, probably are the prime examples. um So that potentially means that we can expect a different growth trajectory for those companies.
00:10:59
Pablo Tomasi
um In the US, sort of T-Mobile or AT&T, they do not seem to be interested at all in that sort of SI consulting route
Defense and sovereignty
00:11:09
Pablo Tomasi
for the time being. But let me know if I'm ah if i'm getting something wrong.
00:11:14
Pablo Tomasi
so that is like a very quick difference that i see between the the north american operators and the and the european operators and of course when i talk about european operators they they do have uh businesses in ah in a lot of emerging markets as well Now, ah something else that I think was interesting, um there are a few companies that that mentioned ah defense as a particularly exciting opportunity.
00:11:42
Pablo Tomasi
um I think we all know it's a big opportunity. I'm personally, I am never too excited about people mentioning defense because i from from you know a very pessimistic point of view, ah yeah the more people invest money in defense, the worse scenario is going to happen in a few years time because you don't just invest for the sakes of it or to make money.
00:12:03
Pablo Tomasi
But anyways, it is what it is. and And clearly, you have a few telcos, but also few vendors that mentioned that as a that a very big ah um opportunity for them, and that it's across the the technology stack.
00:12:16
Pablo Tomasi
But also, you know, plays into the social trust and sovereign solution. And I mean, talking about sovereignty in Europe, really card, really big card that ah pretty much every telco is playing.
00:12:29
Pablo Tomasi
Now, it will it will work, like that that card works, that's what people want in Europe. um um For me, something I struggle little bit of understanding is like the fact that you can play the sovereign card of only only in a market, so to speak.
00:12:46
Pablo Tomasi
So if you're the champion of a country, ah yes, as much as European countries love each other, you may not be the champion on another European country. So eventually you're gonna have a more fragmented market than what a lot of people you know, would like to see.
00:13:02
Pablo Tomasi
so in other words, if you are the champion of France, you cannot be the champion of Spain and vice versa. Because once you start taking the sovereign route yes, it's all about Europe, but then you keep going down the opposite of globalization into sort of nationalism.
00:13:18
Pablo Tomasi
And I believe that that is where the market can potentially go. OK, yes, it's Europe, but then we
Nokia and Ericsson's Strategic Focus
00:13:23
Pablo Tomasi
want to be in that specific countries. um And last point, which is not really related to Telcos, but since i was looking at Telcos results, I thought, OK, let's have a look at vendors as well and and what they're doing.
00:13:35
Pablo Tomasi
And I've seen a ah couple of interesting possible trends emerging here. Now, um from a Nokia perspective, they have they've always been big in private nettooth, but they have not always been loud in their quarterly investors' results about, okay, this is a market where we are making money, where we're making ground.
00:14:02
Pablo Tomasi
I've never fully understood what was the reason, but you know the the that's what it's been for a few quarters. And i think now they are showing a little bit more more love again.
00:14:15
Pablo Tomasi
are they They are expressing it in these quarter results. And i know there are a lot of different moving pieces, but I just thought, OK, if it's a growing engine, then why not mention a little bit more? um and And I think now so we we will be hopefully getting little bit more of that.
00:14:30
Pablo Tomasi
Now from an Ericsson point of view, for a long time Ericsson hasn't really talked a lot in their quarter results about private networks, ah besides the odd mention. But I think that this time around they have been quite explicit talking about private networks and and about their wins.
00:14:47
Pablo Tomasi
And the way that I interpret this is that possibly They may want to you know create a sort of broader enterprise picture. So they have talked a lot previously about Network API, of course, with everything they are doing with Aduna. And now they are one to other, so that's sort of private networks angle so that they can showcase the possibly very broad um capabilities that they have.
00:15:10
Pablo Tomasi
ah Just a thought. So let's see next quarter whether they will continue to do this or not. And that's pretty much everything. Like, very, very quick rundown on ah on a few trends, few technologies that are hitting the mark, few technologies that are not hitting the mark.
00:15:26
Pablo Tomasi
um Let me know what you think. So let me know if I got something really wrong. That would be interesting to hear your opinion. If I got something like partial rights, or what else do you think?
00:15:37
Pablo Tomasi
um is affecting telcos decision to talk or not to talk too much about any of this but also whether you think that the results a quarter results should be taken as a good representation of the commitment that a company has in a specific market. And and I assume it's a little bit of a proxy, so it's not going to be 100% faithful. But of course, the more you mention something, the more likely it is that that you are considering it as a as a big opportunity
Concluding Remarks and Audience Engagement
00:16:05
Pablo Tomasi
or as a market where you really want to leave the mark.
00:16:09
Pablo Tomasi
um Yeah, that's it. So once again, i'm pretty sure there's going to some subscribe and follow button somewhere wherever this is going be posted. and If not, just you know feel free to message me on LinkedIn with any comment and feedback that you have. More than happy to to have a chat about any of these themes and have a great day.
00:16:30
Pablo Tomasi
Bye-bye.