Telecom capital expenditure (Capex)

Concerns around Capex

"In our company there has always been the attitude 'If we build it they will come' but my view is that if we build the wrong thing, in the wrong place, at the wrong price, they won't come! We often don't understand the market correctly - customer demand, customer needs, what customers will pay. Fixed line capex is always technology driven and we need a more commercial approach feeding in to these decisions."

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"Scrutiny at back end is too late. Then we have people coming and asking for forgiveness (when it's gone wrong) -what we want is for them to ask for permission. That way is better. We need everyone to understand 'this is not our money'."

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"Marketing & product management are not rewarded on capex but on revenue and EBITDA!"

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"No one is happy with this situation but it's difficult to fix. There is a lack of planning between the business teams and the IT delivery team. We don't take sufficient account of unknowns. Commissioning departments typically understate the scope of what they want to do (because they don't know how to specify correctly) and then there are always cost overruns, which means the numbers always look bad"

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"Top leaders don't have full technical understanding but they have to trust their technical leaders fully."

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"Capex cases should be presented by marketing & sales people not technology & engineering people"

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"There is no accountability for results in the business. We are never able to follow up or measure the proper return on projects. Investments are open to so many different factors - it's too difficult to measure and wouldn't be credible so is felt to be a waste of time. For cutting edge/new tech projects we are under so much pressure to get to market ahead of our competition that we don't run the projects properly from a capex perspective. We are forced to go at such a speed that we have to work with imperfect information and pay extra to certain suppliers to complete faster."

Improving Capex effectiveness

We have proprietary data, fresh perspectives and new tools to bring to the table. This distinctive approach gives us – and you – a head start. We cut straight to three areas: ruthless decision making, clear accountability and strong capital controls. Here are some examples of the measurable results we have had for other telcos.

Ruthless decision making:
Our Capital Value Planning tool can support telecom operators to build a more commercially led approach to capex planning, bringing together commitments from across the business to allow executives to make clearer choices.

Clear accountability:
Operators often struggle with accountability, particularly when the investment straddles networks, IT and marketing. Our approach ‘up-ends’ traditional thinking by re-casting projects as a portfolio of outcomes and unpicks the traditional model of ‘shooting the IT messenger’. We can help advise on new organisational models that drive real accountability for ROI, not just Revenue, EBITDA and Cash.

Strong capital controls:
Even the best decision go wrong if the value is leaking during delivery. PwC can assist telecoms operators to build a strong capex financial control function that delivers high quality outputs for both business insight and financial reporting. We can help with capex reporting, Fixed Assets Registers (FAR), capex work-in-progress (WIP), regulatory compliance and network inventory.

Clear capex accountability

In most telcos, accountability for revenue, opex and capex is clear. Yet – somehow – ROI accountability falls between the cracks. Most know how to fix this problem for the exceptional projects: NGA, LTE and OSS transformation, but embedding it the ‘business as usual’ capex is where the real savings lie.

PwC's seven Ps capex delivery framework creates a rigorous structure to create tightly coupled links and clear accountability between commercial objectives and funding.

Get well programme

PwC’s Get Well Programme for telecom operators’ capex operations adopts a three phase approach to enable operators to quickly identify what are the root causes for their capex challenges and how their business needs to not just fix them but thrive.

1. Diagnostic overview
First we perform a diagnostic on your current operations exploring your decision making, your accountability model and your capex controls.

2. Review against industry benchmarks
Our next step is to review your business against our proprietary data set of global operators’ practices. Our best practice benchmarking guide provides a scorecard of capex management excellence based on interviews with over 30 global operators. Our study of ~90 operators over the last decade enables you to perform a quantities gap analysis against relevant industry peers.

3. Identify target outcomes
Finally we work with you to build a roadmap to improved performance at three, six and 12 months+ milestones. Our 3 month outcomes focus on quick wins and establishing the required workstreams to realise the value from superior capex management. At six months we can typically deliver a working capital planning tool and delivery framework that identified the hidden drivers and destroyers of value by key commercial levers.