Northstar, our industry-leading analytics suite, uses operational data from more than 60 global telcos to reveal a clear truth: Execution is everything. The difference between an average and best-in-class performance is how operators manage complexity, allocate resources, and drive productivity across more than 100 activities along the value chain. Our analysis exposes five persistent myths that may seem intuitive but continue to hold telcos back from achieving transformative cost savings. By challenging them, operators can unlock new sources of efficiency, improve agility, and create a lasting competitive advantage.
Myth 1: Bigger is better
The belief that "bigger is better" has long shaped the telco industry. Many assume that larger operators will always achieve superior cost efficiency through economies of scale and a vast customer base. However, Northstar benchmark data presents a more nuanced perspective.
The size at which scale benefits diminish varies by operator and is influenced by market conditions, geographic footprint, and the mix of B2B vs. B2C operations. This effect is caused by increased complexity and the failure of some operators to apply the lessons learned during growth, which is essential to maintaining a competitive edge. Once the benefits of scale become weaker, maintaining superior cost efficiency depends less on size and more on optimizing your operations. Streamlining processes, leveraging data to eliminate inefficiencies, and automating repetitive tasks become critical for sustaining profitability. By aligning resources with strategic priorities, telcos can not only create leaner operations but also gain the agility needed to adapt to market shifts and evolving customer demands.
Myth 2: Premium cannot be lean
Some beliefs are so ingrained they feel like universal truths. Take the idea that “you get what you pay for.” It makes sense at first glance; if something is truly premium, it must come with a premium price, and if it does not, it must fall short in quality. The issue, though, lies in how easily this belief morphs into the assumption that premium and efficiency cannot coexist.
Our data demonstrates that telco operators can achieve both premium positioning and cost efficiency without compromise, indicating that efficiency depends more on operational management. For example, the most OPEX-efficient operators, including premium players, perform comparably to the most cost-effective operators, with OPEX per customer just 5% lower. However, premium operators outperform the rest of the market by 2% when looking at OPEX as a share of revenue.
Myth 3: Outsourcing drives down cost
Outsourcing is often seen as a guaranteed path for telcos to achieve cost savings, primarily by shifting operational burdens to external vendors who promise greater efficiency and lower costs. The rationale is that specialized vendors, using their expertise and scale, can deliver streamlined operations more affordably. However, Northstar data tells a different story.
Even when used extensively, outsourcing rarely leads to superior cost efficiency. Operators often overlook outsourcing's hidden costs such as coordination, oversight, and quality management which erode savings. Instead of solving inefficiencies, outsourcing shifts them into a less visible part of the value chain. Vendors face the same challenges as telcos, such as labor costs, infrastructure, and service delivery, but with added margins.
Myth 4: Direct sales channels are more costly
Third-party channels may seem like an easy way to scale: broader reach, faster expansion, and less internal workload. But in reality, third-party sales frequently prove to be more expensive than direct channels due to hidden costs such as commissions, incentives, and vendor management overheads, in addition to diminished control over spending and operational efficiency. Direct sales channels, by contrast, are significantly cheaper.
The main reason? Control. Direct channels allow telcos to target customers more precisely, reducing inefficiencies, improving conversion rates, and strengthening customer relationships. More importantly, they also create opportunities to upsell and cross-sell, boosting per-customer revenue while keeping cost-to-serve low. For telcos, direct sales aren’t just a cheaper option—they’re a strategic necessity. Controlling the sales process drives efficiency, agility, and long-term growth in an increasingly dynamic market.
Myth 5: Expanding beyond the core pays off
Diversification is often seen as the key to growth – expanding into adjacent businesses, adding new revenue streams, and strengthening market presence. But there are trade-offs.
As telcos stretch beyond their core, complexity increases, costs rise, and operational efficiency takes a hit. What starts as a growth strategy can quickly become a burden, forcing operators to rethink whether more is truly better.
The consequences of overstretching the business extend beyond financials; it slows down decision-making, delays time-to-market, and reduces an organization’s ability to respond effectively to market shifts. Telco operators who embrace focus as a central pillar of their strategy, on the other hand, move with speed and precision, capturing opportunities and staying ahead of the competition. By concentrating on scalable, high-impact services and shedding unnecessary complexity, they can not only be more profitable but also improve operational agility, and refocus their efforts on what truly drives value for their customers.
Conventional wisdom costs telcos more than they realize
Our data proves that some of the industry's most deep-seated beliefs—about scale, outsourcing, premium positioning, and diversification—don’t hold up. Bigger isn’t always better. Premium can be lean. Outsourcing doesn’t guarantee efficiency. Third-party channels often drive up costs. And expansion beyond the core? It’s more of a burden than a breakthrough. The real unlock for telcos isn’t in these myths—it’s in operational excellence. By rethinking assumptions and focusing on lean, strategic execution, telcos can cut costs, boost efficiency, and build a sustainable competitive edge.
