Canada’s Telus bets on digital health sector…June 18, 2022 2022-06-18 5:37
Canada’s Telus bets on digital health sector…
Canada’s Telus bets on digital health sector…
Here’s some news to get the pulse racing… Canadian telco Telus has agreed to acquire digital and in-person healthcare provider LifeWorks for C$2.3bn (US$1.77bn) to boost its position in the employer-based healthcare services sector. Such news would have resulted in raised eyebrows and scratched heads five years ago, but with traditional telcos now seeking ways to diversify into adjacent sectors as they become digital service providers (DSPs), the move makes total sense. And Telus isn’t the only telco adopting this specific strategy.
This isn’t a radical shift into totally new territory for the Canadian service provider. Telus Health has, it boasts, been “committed to providing solutions to connect Canada’s healthcare industry” for more than a decade. “With our dedication to developing innovative solutions, we’re future-proofing healthcare,” it states on its website.
And the Telus management team now believes the opportunities in delivering hybrid healthcare services and solutions using digital technologies and connected devices are so strong, it’s willing to invest a lot of cash on a major investment and create a single business unit from the combination of Telus Health and LifeWorks that, if combined today, would have annual revenues of C$1.6bn (US$1.23bn) and “thousands of leading corporate clients across Canada, the US and in over 160 countries, covering more than 50 million lives worldwide.”
Here’s its rationale for the acquisition:
“There has been an unprecedented shift in what is needed to support employers in addressing the evolving health and wellness needs of employees and their families, including a greater focus on supporting mental health. The traditional EFAP [employee and family assistance programme] industry faces increasing pressure to keep up with the rapid pace of change, while seeing increased competition from upstarts that offer scalable, digital-first solutions available wherever an employee may be working, that are able to address the realities facing the modern workforce. LifeWorks has long-standing EFAP market expertise, which includes its unmatched high-touch and in-person solution, as well as its 15-year investment in and focus on its leading digital capabilities and platform, and extensive administrative, retirement and financial solutions.
“Our strong belief is that these capabilities, in combination with Telus Health’s track record of developing rich, digitally native primary, preventative mental health solutions for individuals, patients and practitioners, as well as our exciting IoT capabilities that we are developing for the health vertical, represent an unparalleled go-to-market comprehensive health and mental wellness offering that is well positioned to realize this long-term upside opportunity and take share against legacy and upstart competitors alike. Together, we will advance healthcare delivery models to address both the physical and mental health and wellness challenges impacting our communities, including mental health, aging, and access to care and resources.
“Within Telus Health, we are leveraging the power of our globally leading technology and our caring culture, to build a healthier future. Through collaboration and efficiency, we are creating better health experiences, and cultivating the seamless flow of healthcare data to yield improved outcomes across the entire health and wellness ecosystem. Telus Health and Lifeworks have a shared vision of making it simple and effective for our customers to successfully access and proactively manage their own health and wellness by creating a world-class provider of the most comprehensive suite of employee and family primary and preventative digital healthcare solutions, delivered with an unmatched level of clinical and customer service excellence, and underpinned by our globally recognized corporate culture of care and brand.”
There’s lots more about the deal, the backstory and about LifeWorks in the full announcement from Telus.
The key takeaway here is that as the trend generally referred to as digital transformation takes hold across multiple verticals and companies, organisations, governments and cities become increasingly reliant on cloud platforms, secure and reliable connectivity, real-time data insights and automated operations, so the opportunity for telcos to branch out and tap into new business opportunities grows. One way they are starting to do this on a case-by-case basis is via private network deals and, in time, some operators will no doubt develop expertise in certain industries to be able to build a broader strategy.
Of course, potential is one thing – successful execution is another. And on top of the mammoth challenges telcos face in pivoting their business strategies away from just being providers of connectivity, there is the competitive aspect too, because the major cloud services giants and systems integration behemoths can all smell the money too.
This is why the Telus move is an interesting example of how telcos can at least give themselves a chance of being successful DSPs. This isn’t a knee-jerk decision: This is extending and building upon something that’s been developed for years and where Telus already has some expertise. That doesn’t guarantee success either – it could easily screw this up, as any acquisition is tough to execute successfully. But it’s starting from a strong position and its story, its rationale, has credibility.
And, as mentioned, it’s not the only telco thinking this way. One other example is Telstra in Australia, which identified domestic and international healthcare services as a target growth area as part of its T25 strategy that is being overseen and steered by new CEO Vicki Brady.
So expect more such announcements – of telcos either expanding organically or via merger and acquisition moves into adjacent markets as they evolve their DSP strategies. Then watch the battle for domination as the multiple sectors get even more intense.
In the meantime, Telus investors appear to think the LifeWorks move makes sense: the Canadian telcos’ share price is up by more than 4% today to C$28.72.
– Ray Le Maistre, Editorial Director, TelecomTV