How to build a profitable telecoms business in today's market - TechCentral

How to build a profitable telecoms business in today’s market

Rome wasn’t built in a day, and neither is any successful telecommunications business. It takes patience, skill and determination — especially in today’s landscape of fickle trends and ever-pivoting technology.

Although there are no guarantees when it comes to making a business profitable, there are tried-and-tested ways of helping your telecoms company thrive and prosper.

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There are hundreds if not thousands of telecoms companies in South Africa. These include everything from tier-1 mobile network providers, fixed-line players, broadband suppliers, undersea cable and connectivity providers, ICT equipment resellers, network equipment providers and data centres to various national and local resellers selling bread-and-butter services such as voice, text and data.

The telecoms industry in South Africa has attracted a lot of start-ups over the years with great ambitions of making millions. Unfortunately, not many survive.

As with any new venture, a fair amount of trial and error will inevitably be involved when building a new business. But a solid foundation of knowledge about your target audience, your products and the tools available will go a long way to eliminating unnecessary trial and error.

Business owners with a strong knowledge about their industry are less likely, for instance, to fall prey to chasing trends. Take the issue of VoIP versus GSM. Although GSM has been used consistently with predictable results for decades, many companies are swayed by the relatively new and flashy VoIP — only to be let down by poor voice quality, weak security and a host of other problems.

Which leads us to our next point…

Be consistent

Consistency is integral to business success. It sets the standard for your service and forms a key part of establishing your reputation. It also forms the foundation of what the customer knows they can expect from you. If you keep on doing what you’re doing well, eventually success will follow.

The biggest cause of early business failure in the telecoms industry is a lack of understanding of the sector. From the outside, it is easy to see the telecoms industry as an opportunity to make super profits, super quickly. You might want to start a disruptive telecoms company; unfortunately, it’s not that easy.

To bag the super-profit dream, stick to your knitting. For example, if your core business is office automation, do not divert your strategy into becoming a telecoms player or on-billing voice unless you have adequate capital, knowledge or resources. The telecoms industry is capital intensive and is fraught with surprises such as fraud and various other complexities. You will need to invest seriously in systems, IT equipment, working capital and staff to be efficient and competitive.

It is especially important to use reliable upstream products and suppliers. If your technology fails to deliver, it will reflect poorly on your company, regardless of whether the mistake was through no fault of your own or not. Do your supplier research meticulously and look carefully at the industry standards — you don’t want to fall short, and often you can’t change your choice of primary suppliers easily as your business grows.

Systems, systems and more systems

Success in the telecoms industry relies on achieving efficiency and intelligent automation. This will only happen if your business is agile, systematic and digitalised.

Areas that are particularly important are:

  • Billing: Without a billing system, you will not be able to invoice customers accurately and transparently.
  • Credit risk and debt collection: Cash flow is the cornerstone of any business. Without this, your business will fail. Because margins are so low in the telecoms industry, one bad debt or fraud from a large customer can wipe out your yearly profits, especially for tier-3 or -4 players who are trying to make a start.
  • Customer service: Customers expect great service. They expect it instantly and 24/7. If you are not able to provide this, you will lose the race for profitability.
  • Critical mass: Telecoms profits are measured in fractions of cents and rands per transactions. If you do not have critical mass in customers or the deep capital resources needed to get there, you will soon fail. You may have a couple of hundred customers in your business-to-business office automation company, but with voice and data products, this is insufficient to sustain profitability. Quite often, start-ups luckily secure a single key customer early on, and this keeps them profitable until they can build critical mass. This is a lucky but extremely vulnerable position to be in as it is essentially a single point of failure hanging over your business.
  • IT: Telecoms companies are basically advanced IT companies. You need specialised IT equipment, developers and systems to be competitive. If you are not willing to invest in IT systems, it is unlikely you will be able to play the game.

Simplicity is key

Telecoms technology is highly technical and complex. However, customers demand simple and innovative solutions that need to work around the clock. Offering a solution that is simple, hassle-free and easy to maintain will lead to success.

Achieving simplicity is by no means an easy task. The very idea of simplicity is relative. Like an iceberg, often what customers perceive as a simple solution will require a complex backend implementation which requires dedication, innovation and investment.

Keep the trust

The most damaging thing you can do to your brand is to lose your customer’s trust. By making use of your services, clients put a huge amount of trust in you — namely that you will keep delivering the service you have contracted to do without cutting corners on the backend, and also that you won’t abuse, sell or allow their data to become compromised in any way. It is your ethical responsibility as a company to do your best to honour that trust and ensure that nothing happens to your clients’ valuable information.

Gaining customers’ trust can take months or even years. However, it can be lost in the one second or instance that your service is unavailable. Therefore, using reliable technology is paramount. Technology that can be intermittent, or leaves your business vulnerable to data breaches, leaks and other attacks will only harm your company in the long run.

A good brand backed by a reliable product will position your business for long-term success. Offering products that do not deliver on promises made to customers will leave a bitter taste and an empty income statement.

Maintain excellence

In summary, be excellent! Although that is easier said than done, using the correct tools and technologies can go a long way in helping you to build a successful telecoms business.

Underlying base technology like GSM, available and popular in South Africa since 1993, is a reliable and effective communication service. It is heavily regulated, ensuring that no data gets lost or compromised, and offers a consistent, clear and crisp voice quality.

Build your business with Huge Telecom

Huge Telecom, part of JSE-listed Huge Group, is the biggest provider of GSM fixed-mobile, last-mile solutions in the South African business to business market with its unique GSM Full-Suite Telephony (FST) service.

It uses its knowledge of the industry to help entrepreneurial businesses succeed in servicing their customers on fixed-mobile last-mile requirements. It does this by leveraging of its vast industry experience in providing competitive value propositions, technology and solutions backed by the Huge Group.

Give your new telecoms business the best chance of success by using Huge Telecom’s GSM technology solutions. Contact us today to learn more.

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