Telco data monetisation: building a winning strategy

Times are tough for telecoms operators (telcos) around the world. As EY points out in its recent industry brief, factors including the cost-of-living crisis and disruption to global supply chains present an ongoing threat to financial resilience and stability. The firm also notes that emerging technologies such as 5G and generative AI are raising new questions around business resilience and service innovation. All the while, telcos are operating in a hyper-competitive environment with low profit margins. Having failed to move into value-added markets such as the cloud, many are reduced to little more than public utilities. If telcos are to overcome these challenges and thrive in the years ahead, they need to use every tool at their disposal. In particular, telco data monetisation strategies will prove fundamental in helping operators digitally transform and chart a path to revenue growth.

Five stats that show why operators need telco data monetisation

Data monetisation in telecom is no longer a “nice to have.” Telcos increasingly must embrace telecoms data monetisation strategies to survive and thrive. Here are five reasons why:

1. Telcos’ revenue share from voice has declined 80% in 10 years, while data revenues are only expected to grow at a modest 4% CAGR to 2027. Telcos are staring down the barrel of commoditisation, with their core voice and data businesses in decline. If telcos are to avoid becoming a utility for over-the-top service providers, they need to build their own data-centric business models.
2. Telcos are expected to invest more than $600 billion in 5G infrastructure between 2022 and 2025. If these investments are to pay off, telcos need to be able to monetise their network assets, and the data that they produce, quickly. Fortunately, 5G is well suited for service-layer propositions from telcos due to the high-speed and low latency of the technology. With faster data transmission and real-time communication thanks to 5G, telcos are better placed to roll out services like IoT, smart cities, virtual reality, and digital identity verification services.
3. Approximately 75% of telco’s vertical-sector plays have not achieved scale. Even where telcos are venturing out into new sectors with innovative business models and value propositions, most have failed to deliver significant new revenue. Given the inherent value of data, telco data monetisation could buck this trend.
4. “NetCos” typically achieve EBITDA multiples of 15-25x, compared to an average for traditional telcos of 6-7x. Telcos are increasingly separating their network business (NetCo) from their customer-facing services (ServCo) and seeing a significant revenue uptick as a result. Telcos that have created businesses that are solely dedicated to pioneering and delivering new customer propositions are well placed to experiment with data monetisation strategies.
5. The data monetization market is estimated to be $4.17 billion in 2024, and is forecast to reach $10.35 billion by 2029, growing at a CAGR of 19.94%. This is simply too great a commercial opportunity to pass up. With so much potential for generating new revenue streams, telecom data monetisation should be a no brainer for all operators.

What are telecoms data monetisation strategies?

Telco data monetisation strategies involve extracting value from the extensive amount of intelligence that telecommunications companies collect about their customers and their network usage. Through telecoms data monetisation strategies, operators use their network and customer intelligence to create new revenue streams, improve services, and offer enhanced customer experiences. As data volumes continue to grow, the options available to telcos around their data monetisation strategies are only going to increase. 5G adoption is a key driver in this regard, with the technology expected to increase global average daily mobile usage per smartphone from 21GB in 2023 to 56 GB in 2029. The rise of the Internet of Things is another key data driver, with more than 55.7 billion connected devices expected to be in play by 2025.

Some of the main data monetisation strategies used by telcos include:

1. Data analytics services: Telcos use advanced analytics to transform raw data into valuable insights, which can be sold to businesses interested in understanding consumer behaviours, preferences, and wider trends. This can help other industries like retail, finance, and advertising to tailor their offerings. The telecom analytics market is estimated at $7.42 billion in 2024, and is expected to reach $12.41 billion by 2029, growing at a compound annual growth rate (CAGR) of 10.82%.
2. Targeted advertising: By analysing consented customer data such as browsing habits and app usage, telcos can provide highly targeted advertising opportunities to businesses. This allows advertisers to deliver personalised ads to users, which are more likely to result in engagement and sales. The digital advertising market was valued at $502.79 billion in 2022, and is forecast to reach $1401.39 billion by 2030, with a CAGR of 13.67% over the forecast period.
3. Location-Based Services (LBS): Telcos can monetise the real-time location data of customers by offering location-based services to third parties. For example, they can provide traffic analysis and management solutions to city planners or personalised marketing offers to retail businesses based on customer proximity. The global LBS market reached $45.5 billion in 2021 and is forecast to reach $402.4 billion by 2031 at a CAGR of 24.6%.
4. Internet of Things: Telcos are uniquely positioned to offer network solutions and data analytics for IoT applications. This includes managing and analysing data from connected devices in smart homes, industrial IoT, and smart cities. The global IoT market size was valued at $330.3 billion in 2021 and is expected to grow at a CAGR of 16.7% to reach $650.5 billion in 2026.
5. Partnerships with technology companies: Collaborating with technology companies can allow telcos to integrate their data with other platforms and services, creating new applications and services that can be jointly monetised. For instance, integrating with health tech companies to monitor patient data remotely, or joining with adtech companies to deliver privacy-compliant personalised advertising (see below).

Examples of data monetisation in telecom

Around the world, a large number of telcos are embracing telco data monetisation to open new revenue streams and drive growth. These are often the leaders in their markets with the most resilient businesses and the brightest prospects for the future.

In the field of IoT, for example, Telenor, a global telco headquartered out of Norway, has launched a new tracking-service company that provides pet owners with data-driven services, such as real-time remote monitoring of the location of pets.

Another good example of data monetisation in telecom comes from Vodafone. The company’s “MyFarmWeb” service is “a cloud-based web platform that supports farmers and agricultural businesses with best practice decision making.” The solution uses the IoT to capture information from sources that include everything from the soil of a farm to agricultural markets into an analysis engine. The service allows farmers to improve yields by providing data on soil quality and the presence of pests.

Over in Japan, meanwhile, NTT DOCOMO has created an ambitious data-centric ecosystem that provides digital content, healthcare expertise, financial services, and a B2C marketplace. The telco has created healthcare and telemedicine solutions through partnerships with companies including Genova Diagnostics, Medley, and OMRON Healthcare. Examples of its approach to telecom service monetisation include a ride-sharing service and an AI-driven investment advisory.

Operators are also increasingly looking to tap into the potential for telecoms data monetisation strategies in the marketing sector. One telco in Southeast Asia is offering audience segments from its subscriber base to enterprise clients to help improve customer engagement on channels including SMS, video streaming, e-wallet apps or even call centres. The telco labels its subscribers with over 300 tags including demographic, geographic, behavioural and interest-based criteria. The strategy has proved successful and helped generate leads for insurance, credit card companies, e-commerce affiliate programs, and consumer products.

Another Japanese operator, KDDI, is also tapping into opportunities in the marketing space. The telco has partnered with  Supership Inc. on a next-generation digital advertising distribution platform built on Novatiq’s Fusion platform and leveraging its Hyper ID. The ad platform enables Supership’s publishers and advertising partners to serve relevant messages to web visitors, even when they are browsing anonymously, while ensuring the privacy of personal data.

Challenges with telecom data monetisation

For telcos that are currently weighing up their own data monetisation strategies, charting a course to success is not always simple. If telcos are to create sustainable and scalable data monetisation services, they first need to overcome a range of significant challenges including:

1. Regulatory compliance and data privacy: Telcos must navigate complex and varying data protection regulations across different regions, which can restrict how they collect, store, and use data. Most of these laws mirror the stipulations of the EU General Data Protection Regulation (GDPR), which enforces heavy penalties for firms found to be in breach of data privacy. Concerns around consumer privacy and the handling of sensitive information are paramount, and telcos will need to build any data-centric services on a privacy-by-design approach.
2. Data security. Tied to the issue of privacy compliance is that of data security. According to the EY 2023 Global Cybersecurity Leadership Insights Study, 53% of telcos believed that the cost of cybersecurity breaches to their organisation would exceed $3m that year, up from 40% in 2022. Ensuring data monetisation does not put data at risk is therefore a key consideration from a cost perspective. It is also important to maintaining the trust of consumers. According to one study, more than three-quarters of consumers say that they would completely abandon a brand online if they heard the organisation were breached by hackers, and approximately half said that they would not sign up for a new online service that they heard was breached recently. As AI takes off, the issue of data security (and indeed data privacy) is only going to become more important.
3. Technical and organisational infrastructure/skills: Developing the infrastructure to effectively collect, process, and analyse large volumes of data requires significant investment in technology and skilled personnel. Many telcos lack the advanced analytical tools and capabilities needed to derive actionable insights from their data​. Similarly, sector-specific propositions will require technologies, expertise, and processes unique to that sector. For example, telcos looking to launch data monetisation strategies in the digital marketing space will need to integrate with adtech platforms and acquire expertise from the adtech sector. Partnering with sector experts and technology vendors is therefore key to success. When it comes to areas like adtech, which are currently in constant flux, working directly with adtech vendors is preferable to working with consultancies, as they can offer up-to-the minute insights and recommendations and practical experience.
4. Quality and integration of data: The effectiveness of data monetisation relies heavily on the quality and integration of collected data. Inconsistencies, inaccuracies, and fragmentation across different data sources can hinder the ability to monetise data effectively​.
5. Cultural barriers and change management: Internally, telcos may encounter resistance to the changes required to implement their data monetisation strategies. Shifting organisational culture to fully leverage data-driven insights involves altering established business processes and encouraging a more data-centric approach​​. With vertical-sector plays, it’s important to work with partners from that industry to help educate and inform internal stakeholders.
6. Demonstration of value: Demonstrating the direct financial benefits of telco data monetisation strategies can be challenging, particularly in justifying the initial investment to stakeholders who are accustomed to more traditional revenue streams. This can delay or deter the adoption of new data-driven business models​​. Being able to draw on partners with experience of having successfully deployed to other telcos can help here as these partners can provide case studies and deliver clear timelines for the realisation of value.

Successful telco data monetisation for the marketing vertical

As discussed, one of the most promising vertical-sector opportunities for telco data monetisation is digital advertising. This is because the sector faces a significant data challenge; namely, the loss of the data signals that have historically been used to profile audiences and activate programmatic personalised advertising campaigns at scale.

Digital advertising has grown into a $667 billion market largely on the back of third-party cookies, which track users as they surf the web to build audience profiles that can be used to tailor advertising campaigns and deliver timely messages.

Third-party cookies are clearly invasive from a privacy perspective and are therefore counter to the aims of privacy laws including GDPR, CCPA, POPIA, and the ePrivacy Directive. They are not alone. Other common data sources that have long been used for programmatic advertising are similarly out of touch with the compliance requirements of the privacy-first era such as fingerprinting (the practice of collecting unique information from a user’s device, such as browser type, operating system, and settings, to identify and track the device across different websites), Mobile Device IDs (unique identifiers assigned to a smartphone or tablet that allow advertisers and app developers to track user interactions and behaviours across apps and websites), and user agent strings (a line of text sent by a user’s browser to a website, which details the browser type, operating system, and device being used).

With browser owners deprecating Mobile Device IDs and third-party cookies or adopting opt-in processes, the great data lake that has watered the programmatic ecosystem is drying up. However, consumers still want personalised content. Research suggests that  71% of consumers expect personalised experiences every time they interact with a brand, and 76% feel frustrated when they don’t receive it. What’s more, 66% of consumers report that encountering content that isn’t personalised would stop them from making a purchase. Brands and publishers therefore need to find ways to engage with consumers in a personalised way in a world where the data they need to do so is fading fast.

It’s here that telco data monetisation comes into play. Telecommunications monetisation solutions aimed at the digital advertising sector can fill this void and enable personalised advertising to continue at scale. Of course, any such approach to data monetisation in a telco would require a highly secure, privacy-by-design model that telcos could integrate into their network seamlessly.

Novatiq’s Fusion platform is a case in point. The platform is a service-layer, in-network approach to telco data monetisation for digital marketing. The Fusion Platform, along with its Zenith ID and Hyper ID, provides telcos with an innovative approach to monetise their data for digital advertising while prioritising user privacy and data security.

The Novatiq Zenith ID works by leveraging telecommunication companies’ existing network data to resolve identities on the open web and verify users without tracking individuals. When a user visits a website, the Fusion Platform verifies a unique publisher or brand ID behind highly secure telco firewalls to deliver a consistent view of the same user without knowing who they are. The approach enables brands and publishers to create rich 360-user profiles by connecting visits across the open web and across the internet without needing to identify the user.

Novatiq’s Hyper ID enables personalised digital campaigns to be programmatically activated. Generated in real-time, Hyper ID is a transactional and unique ID that is verified by first-party telco intelligence. The Hyper ID is generated by publishers and added to the ad request for distribution through the advertising ecosystem, enabling risk-free first-party audience activation at scale. As soon as the ID is verified by the telco, Novatiq’s smart technology associates the requested audiences to it – filtered to send specific responses to each buy-side platform. Hyper ID is valid for a single transaction. Once used in the ad transaction, the ID vanishes leaving no traces behind, meaning that no data can be shared further down the value chain without users’ consent.

Making telco data monetisation a success

By taking the right approach to telco data modernisation and drawing on the expertise of industry partners and proved innovative technologies operators can reduce the risk of new vertical-sector plays and rapidly unlock new revenue streams. Most importantly, by adopting service-level approaches to data monetisation they can remain in complete control of new services, thereby delivering added value to consumers while protecting the interests of their business and their subscribers. For telcos that get this right, the future is looking very bright indeed, both in terms of revenue growth and in securing a new place at the heart of the digital economy.