Kathy Gibson reports from the Ericsson Business Innovation Forum in Stockholm – The Internet of Things presents enormous opportunities for telecommunications operators.

Helene Barnekow, senior vice-president and chief commercial officer at Swedish operator TeliaSonera, stresses that its difficult to predict anything in this industry, but its certain that telcos will have to evolve their service offerings to meet the networking demands of the future.

TeliaSonera is the sixth-largest telecommunications operator in Europe, but is also runs a carrier network that provides a global backbone to other carriers and service providers.

Barnekow believes that an increasingly connected customer lifestyle will drive network requirements in the future, with customers now asking for new, realtime products and services.

“We can’t tell you what services will be around in two years’ time – but we do know that as a telco, if we want to deliver on expectations, it puts us on the path to a very exciting journey.

“We are coming from the traditional telco space, and we need to become a new-generation telco. This means we have to provide applications and integrated services, rather than just the traditional telco services. But we still have to stay close to our network base.”

To do this requires a new strategic agenda, she says, and TeliaSonera has defined two elements into this agenda.

The first element is to enhance the core, Barnekow says, which involves making major investments in the network to drive value to customer loyalty through convergence.

The second is to explore opportunities close to the core – the so-called adjacencies – like media, healthcare, music and financial services among others.

Two exciting new business opportunities are in the Internet of Things (IoT) and machine to machine (M2M) solutions.

The global IoT market is forecast to grow by about 15% year-on-year, Barnekow points out – and in the Nordic region this growth will be closer to 30%. “If you talk about innovation, that is a very significant environment to operate from and our customers and partners will drive us forward.”

Just on the consumer front, growth is looking positive as well. From one connected unit per person today, it is going to grow to 2,6 connected units per person. “That’s SIM connections outside of phones and iPads, and represents really good growth,” Barnekow says.

“We are already established in this market and are well positioned to capture the growth.”

TeliaSonera already numbers many of the companies that will be major IoT players among its customers and believes this will contribute to its success in the new market.

“Secondly, we have taken a dedicated team to this, letting them operate as a smaller business from the beginning, with proper sales, P&L and follow up.”

For Telia Sonera, IoT is currently worth about SEK300-million – and Barnekow believes it will grow four times by 2018.

“Our priorities are to focus on horizontal offerings, but also to go vertical. We have selected specific vertical and plan to be really good at them, such as automotive, health and consumer gadgets. Then we want to expand our geographic footprint and eco-systems through partnerships. At the same time, we want to safeguard attractive profitability and limited Capex requirements.

“At the end of the day, TeliaSonera has one commercial agenda: to enhance the core through data monetisation, enterprise business, commercial innovation and customer excellence; and explore opportunities close to the core through adjacencies.