Learning From HKT's Digital Transformation

By James Crawshaw, Senior Analyst, Heavy Reading

HKT is the incumbent operator in Hong Kong with slightly over 50% share of the residential fixed broadband market and around 30% share of mobile subscribers, placing it ahead of the three other MNOs. HKT’s revenue (excluding handset sales) rose 1% year on year in the six months ending June 2018 to US$1,749 million while EBITDA margins (excluding handsets) increased one percentage point to a healthy 42%.

As the first half report shows, HKT has been building on its heritage of traditional connectivity services by introducing new services to its enterprise customers which not only bring higher margins but also increase customer stickiness. Examples include enterprise data management, virtual datacenters, video analytics, and cyber security. In its international telecom arm, HKT has launched an SDN platform with automated layer 2 network provisioning and direct interconnect to global data centers, cloud service providers, and SaaS applications.

In February HKT announced, together with Huawei, a joint Digital Transformation Practice Center (DTPC) which aims to share the experience and practices that HKT has gained during its digital business transformation journey to help guide the transformation of other CSPs. The DTPC is designed to be a platform for exploring and solving the problems CSPs face as they go digital.

In recent years HKT has worked with Huawei to carry out an end-to-end digital business transformation, covering service and operation transformation as well as infrastructure cloudification. HKT says it is now better equipped with the flexibility and agility to enable a speedy launch of new services, and automated service deployment. HKT plans to leverage DTPC to design new products, incubate new services, and pilot new approaches to digitalization.

According to Huawei, the DTPC encompasses five phases: envisioning, ideating, prototyping, realizing, and scaling. Envisioning involves studying the local telecom market, and local digital ecosystem in order to understand the best digital strategy for the CSP. Ideating involves developing new digital product and offering ideas, and identifying key transformation elements and dependencies. The prototyping phase uses new technologies and capabilities to develop the MDE (Minimum Desirable Experience) and MVP (Minimum Viable Product). In the realizing phase the CSP evaluates the impact of MDE/MVP implementation on the network and evaluates the connection between the MDE/MVP implementation and the existing business processes. Finally, scaling involves identifying the profile of the pilot customers and performing small-scale POC verification in the production environment of the CSP.

A traditional transformation project requires heavy investment and long development cycles with no guarantees of success. With DTPC CSPs can experiment in a low cost, low risk and iterative way to see what innovations bring the greatest reward.