Telecom service providers with regional strongholds are challenging the dominance of global telco giants.
Ovum’s reportGlobal deals analysis 1H11: Challengers in Focusshows that 15 service providers signed multinational services deals with total contract values (TCVs) of more than $10 billion in the first six months of 2011.
Both the type of deal and the type of enterprise customer is changing under the influence of new ICT and emerging markets.
Deals are smaller, more compact
The typical telco contract for multinational services signed in the first half of 2011 came out at just under $9 million, a year-on-year increase of nearly $2 million per contract on average. However, the average TCV of the 250 biggest contracts was down sharply, from $43 million in 1H10 to just under $30 million in 1H11.
It seems that enterprise customers are looking for smaller, more compact deals, and not just because they want total cost of ownership (TCO) reductions on renewals (although that is a factor in the first half of every year). There were fewer big deals above $100 million.
Verizon is the standout performer in the deal rankings, not just because it took the single biggest share of the deals going into the pipeline, but because it showed consistently the biggest deals in complex managed services with multinational and multiservice requirements.
Looking down the lists, it has been harder to find end-to-end contracts including services across the spectrum, from bandwidth to hosting, and applications to IT, although conversely it is easier to see value-added services from the applications and IT end of that spectrum. It looks like enterprises are readier to add to their range of services in the contract, which is good news for the service providers that are moving up the value chain.