Nadim Khater at his office. (Image via Touch)

After indulging in an era of global expansion, telecom operators around the world today are finding themselves having to deal with pressing challenges.

Most of these challenges have come as a result of cross platform messaging apps stepping into the market, such as WhatsApp, Viber and Tango, providing low-cost services built on telco’s capital-intensive infrastructure.

Additional elements such as saturated markets, reduced profitability and additional investments requirements to cope with the demands od data are also playing a role in limiting any scaling these companies might be looking into.

Competition is only increasing. With the rollout of Google and Facebook (Google project FI and Aquila, Facebook’s solar powered drones) to shortcut telecom carriers all together.

To mitigate these challenges, telcos are trying to improve their digital positioning and are investing heavily in online content, fintech, e-commerce and Internet of Things.

In many cases, working with startups.

Global operators such as AT&T for example, founded AT&T Foundry innovation centers, fast-paced and collaborative environments where AT&T teams work with startups and developers to deliver the latest apps, products and services.

Similarly, Telefonica has launched Wayra, a large-scale accelerator for digital startups with a portfolio of 330 startups across Europe and Latin America.

In the case of Lebanon

The situation in Lebanon is not so different despite the context of high regulations in the sector and the unique management model, as the only two operators in the country are still public but managed by private companies.

With 96 percent mobile penetration in Q4-2015, and 87 percent of smartphone penetration, the market is nearly saturated.

Lebanese operator Touch, with a 53.82 percent market share, is actively looking to diversify its core offerings (voice, SMS and data) and looking for innovative value-added services. As part of this, it has been partnering with local startups to stay ahead of competition.

“We have clear evidence that we can't keep selling only voice, SMS and data, we have to look at adjacent revenue streams. We have the customer profiles and the billing relationship to do so,” said Nadim Khater, chief commercial officer at Touch during an interview with Wamda.

Touch working with startups

During Wamda’s last Mix N’ Mentor in Beirut, Touch took part in the Marketplace activity and picked one startup to work closely with, Carpolo, a rewards-based carpooling app for university students that aims to reduce the number of cars on the road.

Soon after, we sat down with Khater and tried to understand and highlight the profile of startups Telco’s are looking to partner with.

Build an attractive value proposition. “We are very value-centric in our approach, and we would expect from entrepreneurs to validate propositions that are valuable for our customers,” Khater said during the interview.

Telcos have the potential to engage a lot with entrepreneurs and have a lot to offer, such as location, database, SMS, direct operator billing, which are elements needed by startups trying to scale in this industry.

“We are very good at selling minutes and megabytes, but we are exploring new revenue streams; we are looking for partners with digital content and services,” Khater said.

Don’t come with an idea, come with your MVP. When pitching to telcos (and this applies to any large corporation) entrepreneurs are encouraged to focus on presenting a solution that answers customers’ needs. “We’d like to see focus and a simple, brief and straightforward approach that addresses metrics and quantification of milestones such as ability to monetize and time to access the market,” explained Khater. “Ideally the startup will come to us with a clear view of the MVP [Minimum Viable Product],” he adds.

Showcase the drive of your team. Looking closely at what telcos are offering today then conducting in depth research on how that can be scaled up through other services to bridge different gaps is a key element to have when pitching to a corporate, according to Khater. “We are always in the pursuit of relevance but entrepreneurs have the disruption edge that is fueled with their hunger to achieve, we need to leverage this energy and drive for mutual benefit,” Khater told Wamda.

As Touch is in the process of setting up an entrepreneurship and startups program to drive innovation into the core of their company, it is also planning to leverage its own partnerships for the best of the startups. “We want to incubate selected startups, and offer them the chance to get exposure and access to our partners such as Cisco, Huawei and WhatsApp,” explained Khater.

The Lebanese telco is already involved in several activities with startups, such as building their own application with Lebanese mobile application developer, FOO, which is still number one on the Google Play store in the region.

“We owe it to ourselves, being big corporates, to try and take entrepreneurs under our wing,” Khater added. “And as Touch, it is a responsibility towards the vertical we operate in (ICT Sector) an opportunity at the same time, as we look for the next big thing or things.”