Today telecom around the world is growing rapidly and changing in terms of services being offered by telecom operators. Telecom provides infrastructure to connect people and things to each other. They offer the wide range of services to the business and costumer. As telecom is a capital-intensive business where required a big infrastructure to provide services to the customers but its cost always overlooked and you will find the way to bring cost in control.
This big infra investment stops a newcomer to enter the telecom market and the fear of an unknown cost that has to pay to turn telecom business in profitable. telecom need to an integrated latest system, software, and services. Your well planned with leveraging high-tech alternatives and monitoring solution can significantly reduce telecom expenses and improve operations. But Indeed, there is key question comes first in mind before starting a telecom business operation that how to manage the telecom and mobility cost expenses to reduce the costs and streamline its operation.
Here we will understand all cost that fears unknowingly to entrants. The expense of telecom organizations are mainly divided into two categories and underneath categories are divided into subcategories of different area.
- Operational Expenses (OpEx)
- Capital Expense (CaEx)
This is normal and regular expense to run any business. However, some costs are fixed from one payout to another, and some are variable. Operational costs are rental, salary, administrations, call center, electricity, diesel consumption, interconnection call cost, and marketing. All cost has little variation yearly but there are largely fixed on monthly. Variable costs vary with the output produced or services rendered.
This is one time and basic investment in procuring infra and materials which required for the organization to acquire, upgrade, and maintain physical assets. As it is fixed assets which costs do not vary with the output quantity. Capital expenses are spectrum licensing fee, tower installation, software and hardware cost, sim card, offices cost, property, industrial buildings, and equipment etc.
Setting up spectrum, tower, software etc going to be higher than operational investment for the first 5 years of business as it assumes that cost can be now recovered from next 15 years of the operation. After 5 years, there would be fewer expenses on infra but there need to invest in an operational cost to boost sale and gain profit from the market. There is a lot of fixed cost which results in a high operating cost of business. High-cost leverage makes these telecom organization focus on new acquisition and retention of client and its impact on organization’s profitability. The cycle of graduation also increases the cost of capital expenses.
As managing telecom services is complex and its required the constant attention to managing all cost. Now you have understood the cost of telecom and can’t say that it is unknown fact, which can be managed by using a technique called Telecom Expense Management. It’s approaching to manage all telecom cost and minimize the expenditure and maximize the efficiency of systems.