WIND: Cost Transformation

WIND is a leading Italian telecommunications operator, one of the few European telecoms providers to offer customers integrated/convergent wireline, wireless and Internet solutions.

Founded in 1997 and now owned by Orascom Telecom Holdings, WIND has a long history of innovation.

Accenture worked with WIND to transform the cost structures by optimizing the business in three key areas:

• Network
• Business processes
• Procurement

A six-month analysis and planning phase followed, with the implementation taking an additional 12 months. The overall project identified savings equivalent to 16 percent of the total baseline operational costs.

"With Accenture’s help, we were able to immediately improve our cost base and also have the capability to compete more effectively into the future.”—Giuseppe Gola, chief finance officer, WIND.

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Across Europe, telecommunications growth is slowing as markets reach maturity. Even the mobile market, long an engine of growth, is contracting: Revenue growth is slowing to an annualized 8 percent, with average revenue per user (ARPU) worldwide set to show an annual compound decline of 3 percent.

The Yankee Barometer predicts that ARPU growth for wireless service carriers in both the United States and Europe will continue to fall for the foreseeable future. Customers’ increasing reluctance to pay premium rates for new services does not, however, reduce the importance of new offerings in the battle to keep existing customers and gain wallet share.

In the quest to achieve high performance, therefore, telecommunications companies are turning to innovative cost transformation to help them maintain profitability while constantly improving the services they offer. In Italy, where mobile phone penetration is 90 percent, this dynamic is particularly strong.

Furthermore, as in many markets, the Italian market remains dominated by the former incumbent with all operators moving toward integrated/convergent services. WIND wanted to list on the Italian Stock Exchange and consequently needed to have suitable financial results including a positive cash flow and improved earnings before interest, tax, depreciation and amortization.

To achieve this goal, WIND executives concluded that as growth possibilities were very limited, the company’s performance would have to be enhanced significantly. Cost transformation must therefore form part of a holistic program to optimize business processes. In this way, cost transformation truly would become a driver for high performance, allowing the company to consolidate and streamline operations to compete more effectively.

Accenture created a structured strategic program to meet WIND’s ambitious objectives. A preliminary assessment phase, lasting two months, indicated three main cost-saving areas:

• Network
• Business processes
• Procurement

A six-month analysis and planning phase followed, with the implementation taking an additional 12 months. The overall project identified savings equivalent to 16 percent of the total baseline operational costs.

From a cost control point of view, the project has proved to be extremely successful. WIND has become cash positive and profitable in a market characterized by intense competition and pressure on margins. Operational expenditure has been dramatically reduced, exceeding the projected 10 percent.

So successful was this program of rationalizing WIND’s leased lines that Accenture created a solution, Accenture Leased Line Optimization Program, which already has been used to help other service providers achieve similar benefits.

As a result of the success of this project, Accenture and WIND continue to work together on projects to advance the company toward high performance. These include application development and management, customer relationship management and the ongoing management of WIND’s leased infrastructure from the incumbent.