The telecommunications industry is transforming, driven by escalating network valuations and intensifying competition. To attract investment and showcase network value, telcos are separating into network-focused (NetCo) and service-focused (ServCo) units.
NetCo is a distinct operational unit within a telecommunications company, focused on managing and expanding a network's infrastructure. It allows companies to optimize network resources and make smarter investment decisions. However, embracing a ServCo approach enables long-term customer value, reduces sales and marketing expenses, and fosters sustainable growth – crucial in an era where fiber technology and online shopping are pressuring margins.
Originally driven by regulations, this structural split is now pursued for profitability, as seen with O2 Czech Republic, Denmark's TDC, and New Zealand's Chorus. To support 5G and fiber networks, telcos must redesign business processes and IT systems, boosting agility, cost efficiency, and innovation. Implementing a phased strategy ensures a smooth and effective transition into independent operations.