Selling to Communication Services
In a business where a three-second delay means a lost customer, you aren't just a vendor to communication services—you’re the engine that keeps them from losing their market share. By cutting out lag and automating how the network handles traffic, your tools give clients the speed to beat out fast startups and the strength to fix their old, slow systems.
Telecommunication Highlights
- Telecommunications is a competitive business with a few major players competing to keep and steal subscribers (customers) from each other. This tends to drive down profit margins, which are typically lower than other industries.
- Companies in this industry are asset-intensive as they must invest heavily in building and maintaining networks. Network speed and reliability are critical to attracting and keeping customers.
- Competition keeps organic growth rates lower, making acquisitions of other companies a common strategy.
- Additional key measures important in this industry are average revenue per user (ARPU), which is around $31 per month, and net subscriber additions, which tracks the number of new subscribers gained minus the number of subscribers lost.
Compare your client's results to industry and S&P 500 results.
|
Telecommunications |
S&P 500 |
|
|
CASH |
||
|
Cash and Cash Equivalents as a % of Sales |
6.3% |
22.7% |
|
Cash Generated from Operations as a % of Sales |
25.7% |
20.9% |
|
|
||
|
Gross Profit Margin % |
48.1% |
49.6% |
|
Operating Profit Margin % |
32.2% |
23.2% |
|
Net Profit Margin % |
10.7% |
12.9% |
|
|
||
|
Return on Assets (ROA) % |
4% |
8.4% |
|
Equity Ratio |
27.5% |
33.7% |
|
|
||
|
Revenue Growth Rate % |
-1.5% |
6.3% |
|
Net Income Growth Rate % |
2.5% |
8.1% |
|
|
||
|
Revenue per Employee |
$6.1M |
$1.6M |
Notes:
-
Because cash amounts can vary dramatically from company to company based on a company’s overall “size,” we’ve presented the numbers as a percentage of sales or revenue: the cash metric divided by total revenue or sales and then multiplied by 100.
-
S&P 500 averages are calculated based on 3 years of annual reports as of July 2024, rounded. However, because certain financial industries, like asset management companies and diversified banks, hold large amounts of cash, they have been removed from the cash calculations.
-
Most industry or sector averages are also calculated based on 3 years of annual reports from S&P 500 companies. However, certain companies or subsectors in the S&P sometimes skew the data far from what is typical for an industry, so we have occasionally removed some companies or subsectors or changed periods in our calculations to provide a more accurate set of comparison data.
What are Health Insurance CEOs telling Wall Street right now? We analyzed the latest annual reports from five top players to identify the mission-critical priorities shaping their 2026 spending.
1. Profitability and LTV Over Raw Growth:
The era of growth at all costs is over. Insurers are intentionally shedding unprofitable members and exiting certain geographies to protect their bottom lines. Humana has explicitly shifted its strategy away from "loss leader plans," focusing instead on maximizing customer lifetime value (LTV) and retaining high-quality membership. Commercial growth is similarly measured, with companies like Elevance and UnitedHealth prioritizing margin integrity over raw volume.
2. Massive AI and Automation Initiatives:
Artificial intelligence is being aggressively deployed to counter rising administrative and medical costs. UnitedHealth Group anticipates nearly $1 billion in AI-enabled operating cost reductions in 2026 alone, using it to handle over 80% of member calls and streamline advocacy. Elevance is also making targeted investments to embed AI-enabled capabilities that simplify the member experience and speed up prior authorizations.
3. Hyper-Focus on Specific High-Cost Trends:
Rather than fighting general medical inflation, insurers are targeting specific spikes in utilization. Centene noted that behavioral health is driving roughly 50% of their excess medical trend, with home health and high-cost specialty drugs acting as secondary pressure points. Solutions that can effectively manage complex populations or utilize advanced algorithms to detect fraud, waste, and abuse in these areas are highly attractive.
4. Pharmacy Benefit Transformation: The pharmacy benefit manager (PBM) space is undergoing a massive structural shift. Cigna and UnitedHealth are heavily promoting new, transparent, "rebate-free" pricing models that pass savings directly to clients and consumers. Furthermore, insurers are heavily leaning into the adoption of lower-cost biosimilars to generate billions in savings over the next few years.
The Scenario:
A SaaS vendor selling an AI-driven claims tool was struggling to overcome the "we already have a large internal team for this" objection from a C-suite executive at a mid-sized health insurer.
The Strategy:
Instead of focusing on software features, the rep used the Revenue per Employee metric ($8.9M industry average). They proved that while the insurer’s revenue was growing, their headcount was growing faster—dropping their specific ratio to $7.2M (underperforming the industry).
The Pivot:
"Your business model requires high leverage; every employee needs to support nearly $9M in revenue just to protect your 3.3% net margin. Currently, your claims team spends 40% of their time on manual entry. We aren't here to replace your team; we are here to get your Revenue per Employee back above the $8.9M benchmark by automating 'low-value' touches."
The Result:
The executive shifted from seeing a "software cost" to a "margin protector." The deal closed because the vendor aligned with the executive’s hyper-focus on operational efficiency and headcount leverage.
The Scenario:
A workplace consultant was pitching a space-utilization audit to a COO facing a "return to office" dilemma. The COO was considering a generic mandate to bring everyone back just to justify lease costs, despite the risk to retention.
The Strategy:
The consultant ignored aesthetics and focused on the 3.3% Net Profit Margin. They analyzed the insurer's footprint and found three regional centers were only 40% occupied, creating a massive "administrative leakage" that was eroding the bottom line.
The Pivot:
"Your real estate overhead is a significant drag on your 3.3% margin. By rightsizing your footprint through activity-based zones, we can exit 30,000 sq. ft. of space, saving $1.2M in annual OpEx. To generate that same $1.2M in profit via new business, your sales team would have to close $36M in new premiums. We can give you that result today without a single new sale."
The Result:
The COO realized the audit wasn't a design project—it was a capital allocation strategy. They greenlit the study because the cost was negligible compared to the $36M in "equivalent premium growth" it uncovered.
- Profitability and LTV Over Raw Growth: The era of growth at all costs is over. Insurers are intentionally shedding unprofitable members and exiting certain geographies to protect their bottom lines. Humana has explicitly shifted its strategy away from "loss leader plans," focusing instead on maximizing customer lifetime value (LTV) and retaining high-quality membership. Commercial growth is similarly measured, with companies like Elevance and UnitedHealth prioritizing margin integrity over raw volume.
- Massive AI and Automation Initiatives: Artificial intelligence is being aggressively deployed to counter rising administrative and medical costs. UnitedHealth Group anticipates nearly $1 billion in AI-enabled operating cost reductions in 2026 alone, using it to handle over 80% of member calls and streamline advocacy. Elevance is also making targeted investments to embed AI-enabled capabilities that simplify the member experience and speed up prior authorizations.
- Hyper-Focus on Specific High-Cost Trends: Rather than fighting general medical inflation, insurers are targeting specific spikes in utilization. Centene noted that behavioral health is driving roughly 50% of their excess medical trend, with home health and high-cost specialty drugs acting as secondary pressure points. Solutions that can effectively manage complex populations or utilize advanced algorithms to detect fraud, waste, and abuse in these areas are highly attractive.
- Pharmacy Benefit Transformation: The pharmacy benefit manager (PBM) space is undergoing a massive structural shift. Cigna and UnitedHealth are heavily promoting new, transparent, "rebate-free" pricing models that pass savings directly to clients and consumers. Furthermore, insurers are heavily leaning into the adoption of lower-cost biosimilars to generate billions in savings over the next few years.
What are the leaders in digital connection and content telling Wall Street right now? We analyzed the 2026 strategic outlooks for the top players in social platforms, search, and streaming to identify the priorities shaping their spending.
1. Retention and Wallet Share Over User Acquisition:
The days of chasing raw user growth are over. Markets are saturated, so the focus has shifted to "Monetization Per Minute." Companies are shedding low-engagement features and focusing on stickiness. The goal is to keep a user within one ecosystem—whether for search, shopping, or entertainment—to maximize the Average Revenue Per User (ARPU) rather than just adding new names to the database.
2. The Transition to Generative Ad-Tech:
Advertising is being rebuilt from the ground up. Companies are moving away from manual ad creation to "Generative Placements," where AI creates a unique, personalized ad in real-time for every single viewer. This is aimed at fighting ad fatigue and skyrocketing the conversion rates that keep advertisers from moving their budgets to competitors.
3. Massive Infrastructure Re-Architecting:
Content delivery is becoming more expensive as video quality and AI-interactivity increase. The industry is hyper-focused on moving the data processing closer to the user’s house or phone. By reducing the distance data has to travel, companies are trying to slash their massive energy bills and prevent the lag that causes users to close an app and go elsewhere.
4. The "IP Efficiency" Era:
In the streaming and content space, the content "arms race" has cooled. Executives are prioritizing franchise efficiency—investing deeply in established hits with built-in fanbases rather than gambling on a high volume of new, unproven shows. The mandate is to extract more value from existing intellectual property through gaming, merchandise, and interactive experiences.
The Scenario:
A salesperson for a real-time engagement platform was pitching to a Product VP at a major social media company. The VP was hesitant, claiming their current "likes" and "shares" were high enough and they didn't need new engagement tools.
The Strategy:
The salesperson ignored the social metrics and focused on Revenue Per User Minute. They showed that while users were staying on the app, the "intent to buy" was dropping because the content was too passive.
The Pivot:
"People are spending hours on your app, but your Revenue Per User Minute is flat. You’re providing entertainment, but you’re not capturing the transaction. Our tool turns passive viewing into 'Active Shopping' by allowing users to click and buy directly inside the video stream. We don't want to increase the time they spend on your app; we want to increase the value of every minute they are already there. If we can lift your transaction rate by just 2%, it adds more to your bottom line than gaining 10 million new non-paying users."
The Result:
The VP stopped seeing the tool as a "fun feature" and saw it as a revenue multiplier. The deal closed because it solved the problem of stagnant ad revenue in a crowded market.
The Scenario:
A data analytics firm was pitching a predictive churn tool to a CFO at a global streaming service. The CFO was focused on cutting costs and didn't want to spend money on "more data."
The Strategy:
The consultant ignored the technology and focused on the Cost of Acquisition (CAC). They proved that it cost the company $80 to win one new subscriber, but they were losing 15% of their subscribers every month—effectively "leaking" millions of dollars in marketing spend.
The Pivot:
"Right now, your 'leaky bucket' is costing you a fortune. For every user who cancels, you lose their $15 monthly fee and the $80 you spent to find them. Our system identifies 'at-risk' users 30 days before they quit, allowing you to offer them a targeted discount or a new show. If we reduce your churn by just 3%, that’s the financial equivalent of your marketing team signing up 500,000 new people for free. We’re here to protect the money you’ve already spent."
The Result:
The CFO realized the tool wasn't an "expense"—it was a capital protection strategy. They greenlit the project because the ROI was measured in saved revenue that otherwise would have vanished.
- Profitability and LTV Over Raw Growth: The era of growth at all costs is over. Insurers are intentionally shedding unprofitable members and exiting certain geographies to protect their bottom lines. Humana has explicitly shifted its strategy away from "loss leader plans," focusing instead on maximizing customer lifetime value (LTV) and retaining high-quality membership. Commercial growth is similarly measured, with companies like Elevance and UnitedHealth prioritizing margin integrity over raw volume.
- Massive AI and Automation Initiatives: Artificial intelligence is being aggressively deployed to counter rising administrative and medical costs. UnitedHealth Group anticipates nearly $1 billion in AI-enabled operating cost reductions in 2026 alone, using it to handle over 80% of member calls and streamline advocacy. Elevance is also making targeted investments to embed AI-enabled capabilities that simplify the member experience and speed up prior authorizations.
- Hyper-Focus on Specific High-Cost Trends: Rather than fighting general medical inflation, insurers are targeting specific spikes in utilization. Centene noted that behavioral health is driving roughly 50% of their excess medical trend, with home health and high-cost specialty drugs acting as secondary pressure points. Solutions that can effectively manage complex populations or utilize advanced algorithms to detect fraud, waste, and abuse in these areas are highly attractive.
- Pharmacy Benefit Transformation: The pharmacy benefit manager (PBM) space is undergoing a massive structural shift. Cigna and UnitedHealth are heavily promoting new, transparent, "rebate-free" pricing models that pass savings directly to clients and consumers. Furthermore, insurers are heavily leaning into the adoption of lower-cost biosimilars to generate billions in savings over the next few years.