Source: S&P Global Capital IQ, S&P Global Market Intelligence, Accenture Analysis
The result is that the enterprise values of CSPs are now less than the sum of their individual parts. Finding new ways to unlock value is imperative. And while the financial drivers forcing CSPs to contemplate some form of structural separation are powerful, they are not the only reason. There are also strategic considerations that make separation a viable play. For example, the emergence of 5G and new network innovations call for a “connected industry orchestrator” that can serve as a platform and exchange for others to innovate new services such as edge compute or security. Today, that’s a role that integrated CSPs simply don’t have the management capacity or focus to bring about.
A conversation that would have been infrequent just a few years ago is now very much a live dialogue in the industry. Structural separation into a network company and customer-facing services business offers an opportunity to create value for the communications industry. It also creates a new asset class for institutional investors – one that can deliver consistent returns.