Challenges
The telecommunications industry is constantly shaped by disruptive developments that create both challenges and new opportunities.
On the B2C side, the COVID-19 pandemic led to revenue declines in the sector, driven in particular by lower roaming revenues due to reduced travel and mobility, as well as extended retail closures. As a result, spontaneous in-store handset upgrades, which had previously contributed to sales, largely disappeared. By contrast, the fixed-line market, which had been in long-term decline, saw this negative trend ease and has even recorded slight value growth in recent years.
At the same time, data traffic has been rising exponentially for years. This development was further accelerated by the pandemic, especially in the B2B segment, as remote working and video conferencing have become standard practice.
Overall, these developments show that telecom providers need a high degree of strategic flexibility to respond effectively to continuous change and shifting market trends. Customer preferences and willingness to pay are evolving, and these shifts must be reflected both in the pricing of new products and in price adjustments for existing offerings.
Growth strategy and product portfolio
The telecommunications market is dominated by large supra-regional providers with strong positions in key segments. At the same time, local players, often including discount providers, have also secured their place in the competitive landscape.
Against this backdrop, many companies face the challenge of defining how they can compete successfully alongside established market leaders. This is particularly relevant in a market where many offerings appear highly similar, making purchasing decisions more difficult for customers. Unless providers clearly differentiate their offers through compelling competitive advantages and unique selling points, customers will often base their decision primarily on price.
New pricing models are needed
New and increasingly complex products require pricing models that many companies have not yet fully developed or mastered. A string foundation in this context is Value-based pricing, which systematically assesses customers’ willingness to pay and uses these insights to guide pricing decisions.
This also requires providers to define their strategic price positioning in relation to competitors. Do they want to compete as a premium provider, or do they aim to position themselves in the mid-market or entry-level segment?
In many cases, smaller providers deliver additional value through local proximity and fast service, yet still price below larger competitors. This often results in avoidable profit loss.
Subscription pricing and recurring revenue management
As subscription-based business models and SaaS continue to grow in importance, subscription pricing and recurring revenue management are becoming increasingly relevant. Companies are moving away from one-off transactions and placing greater emphasis on subscriptions and other recurring revenue streams.
A critical element of this shift is service pricing. Services should not be treated as free add-ons, but as value-creating components for which customers are willing to pay and should be charged accordingly.
Bundles and add-ons
he industry’s dynamic nature is also reflected in the growing importance of bundles and add-ons, which customers can select flexibly. Pricing these offerings appropriately creates an additional layer of complexity.
Another challenge arises from third-party providers and resellers that purchase capacity and bandwidth and resell them at lower prices on platforms such as Amazon. Because these players often compete primarily through undercutting, the result can be a downward pricing spiral or even a full-scale price war. In such scenarios, the platform often captures a disproportionate share of the value.
Sales strategy and market penetration
For telecommunications providers, sales strategy typically comes down to two fundamental questions: Where should we sell, and how should we sell? In practice, however, the answers are often based on outdated sales structures and therefore no longer fit current market realities.
“Where should we sell?”
The question of where to sell is closely linked to network infrastructure expansion. Which regions or areas should be developed? And in which cases is that expansion economically justified? Building fiber-optic infrastructure, for example, requires significant upfront investment and is rarely profitable in the early stages. Providers therefore need to identify the areas in which these investments are most likely to generate sustainable long-term returns.
“How should we sell?”
When it comes to the sales approach, two developments are particularly important:
- E-commerce is becoming increasingly relevant and continues to replace significant parts of traditional offline business.
- Sales activities are increasingly managed through Key Account Management in order to acquire major business customers and manage these relationships strategically and effectively.
Customer success / experience
The telecommunications industry is under continuous pressure to innovate. As solutions become more sophisticated, customer expectations are rising, even as prices for traditional services continue to decline. Providers need to respond to this dynamic in both the B2B and B2C markets.
This is reflected, for example, in the ongoing need to improve network infrastructure and expand access to high-quality, high-speed connectivity such as 4G and 5G. If providers fail to meet these expectations, customers are quick to switch to competing offers. As a result, effective churn and retention management has become a strategic priority in an increasingly competitive market environment. To succeed, companies must take a holistic view of the customer journey and systematically optimize every relevant touchpoint.
Solution approaches: success with strategic pricing and sales measures
The wide-ranging challenges in the telecommunications industry require tailored solutions designed around each company’s specific market situation. We develop these solutions together with our clients.
E-commerce and multi-channel strategies
At a strategic level, companies need clearly defined e-commerce and multi-channel strategies. In the telecommunications sector, hybrid sales models are increasingly common. MediaMarkt, for example, is expanding sales through its own online shop while continuing to leverage its extensive international store network.
At the same time, companies need to determine which markets should be prioritized going forward. In an increasingly competitive environment, resources must be allocated carefully to achieve sufficient market penetration and sustainable growth. Otherwise, it becomes difficult to compete effectively with major international players such as Samsung, Vodafone, or Huawei. In this context, pricing strategy and pricing execution play a particularly important role.
Condition systems
In many cases, historically grown condition systems put unnecessary pressure on profitability. Revising these structures and systematically eliminating discounts that are not linked to any clear customer contribution can create significant value.
Churn and retention management
Customer management remains another critical challenge, as churn is a constant reality in the sector. A professional approach to churn and retention management, supported by strategically aligned innovation and investment decisions, can help companies respond effectively. Providers that succeed in clearly differentiating their offerings from the competition, for example through strong value selling or intelligent bundling, create the basis for sustainable long-term profitability.
Experience and project examples
Prof. Roll & Pastuch brings extensive experience in the telecommunications industry. We have worked on both B2B and B2C projects with a wide range of companies across the DACH region, from local mid-sized businesses to leading international market players, helping them solve complex commercial challenges.
Selected project examples include:
- Conducting a pricing audit and designing a new pricing architecture
- Analyzing pricing levers to identify the most important B2B pricing drivers affecting market share, business performance, strategic positioning, and sales effectiveness, including customer success implications and XaaS value pricing
- Developing a market entry strategy for the launch of a new product offering
- Redesigning pricing models to improve upselling and drive sustainable profitability growth
- Creating a new communication approach to support targeted upselling
- Assessing pricing levers and developing a value-based pricing approach for a new subscription-based product
Explore the pricing and sales potential of the telecommunications industry
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