Why cybersecurity is so attractive to telecom operators

From network security to cybersecurity, there is only one step… The four main French telecom operators have now all taken it. By launching in early April through its subsidiary Free Pro,Iliad was the latest to take on this booming market as the cyber threat escalates. First to arrive on this front, in 2014, Orange Cyberdefense already employs 3,000 experts and has just announced that it wants to recruit nearly 800 in 2023, for the second year in a row.

SFR and Bouygues Telecom are not to be outdone, with their subsidiary dedicated to business telecoms. This voluntarism owes nothing to chance. “The links are quite logical between the traditional connectivity activities of operators and cybersecurity,” notes Alexis Jouan, analyst at Xerfi and author of a recent market study.

“Scam filters”

In fact, companies seeking to protect themselves are all already customers of an Internet service provider. And this supplier is then ideally placed to analyze the data that enters and leaves its client.

For this reason, telecom operators are eagerly awaited, while the National Information Systems Security Agency has just called for “massive” computer protection efforts in all organizations, including small businesses. The government wants to mobilize Orange, SFR, Free and Bouygues Telecom to deploy an “anti-scam filter” next fall. Capable of blocking fraudulent classified URLs, this system looks like two drops of water to some existing offers.

Telecom operators […] can take cybersecurity to scale

Gérome Billois Partner at the consultancy firm Wavestone

“Telecom operators have a box in all companies, so they can scale up cybersecurity: an SME boss would have nothing to do, he would be safer,” notes specialist Gérome Billois, for the Wavestone consulting firm. Even if they are not infallible – recent data leaks at Orange Cyberdefense, Altice and Bouygues Telecom show – the operators know the threat better than their customers.

New Eldorado

The acceleration of telecom operators in the field also responds for them to an imperative need for diversification. While web champions like Amazon, Netflix or Google are capturing more and more value from the general public, professional markets are acting as a new El Dorado. But in this universe, traditional activities, such as telephony, suffer while cybersecurity progresses.

Admittedly, the profitability of this new business is far from obvious. In a context of shortage of competent professionals in the field, recruitment and retention of employees are expensive. To hire or to sell, competition is fierce in the face of multiple players, from digital services companies (Atos, Capgemini, etc.) to consulting firms and more and more major remote computing platforms (cloud computing) such as Microsoft or Google.

Furthermore, telecom operators often limit themselves to installing software created by American or Israeli partners for their customers rather than developing innovative threat detection systems.

“These are very different margin rates, less than 10%, that is to say lower than the historical margins of telecom operators. It is also far from those approaching 20% ​​of a cybersecurity software publisher, ”underlines Stéphane Dubreuil, consulting director at Niji. With the acquisition of ITrust, Free will be an exception since the company created by Jean-Nicolas Piotrowski designs its own technologies.

But cybersecurity is a welcome source of growth for operators. Present in several European countries, Orange Cyberdefense claims an increase of 14% for its 2022 revenues, to nearly 1 billion euros. In France, SFR mentions an increase in its cyber revenue of 20% in 2022. Faced with such dynamism, darkly linked to the increase in risks, Orange is even considering taking over the expertise now offered to VSEs and SMEs within a general public offer.