The telecom sector will shine in post Covid-19 era, according to the beancounters at GlobalData.
In a report, with the racy title, “Tech, Media and Telecom Trends 2020 – Updated for COVID-19 – Thematic Research”, the analysts said that Covid-19 is by far the most significant theme to affect the technology/telecom industry in 2020.
However, its effect is going to be short-term. In the post Covid-19 era, telcos are expected to perform well as the world will be more connected and businesses better prepared for such calamities.
The report evaluated the impact of Covid-19 on 600 companies across 17 sectors in technology, media and telecoms (TMT).
Sapana Maheria, Practice Head of Thematic Research at GlobalData, said: “The global telecom market will face sales challenges due to retail store closures and supply chain disruption, and may also take an average revenue per user (ARPU) hit as states insist on bill waive programs to keep the financially weak sectors of society online. Customer support lines will also be affected, as call center staff are required to work from home wherever possible. 5G spectrum auctions and roll-outs are facing delays in several countries.”
GlobalData’s analysis of the share price performance of the leading telcos shows that the worst hit companies are from China.
This is mostly because China’s telecom market is already saturated with mobile subscription penetration expected to have reached 115 percent in 2019, according to GlobalData.
China’s telecom services market has seen a drop of 15 million mobile subscriptions in Q1 2020. A report by Bloomberg claims that this is the biggest quarterly decline in the Chinese mobile subscriber base since they started recording the data in 2000.
China Mobile has reported a loss of more than 8 million subscribers while China Telecom and China Unicom lost 5.6 million and 1.2 million users, respectively, in Q1 2020. The recent travel and quarantine restrictions have caused staff shortages and impeded the transportation of telecom equipment. As a result, tenders for six big 5G projects have been postponed since January 2020.
Maheria continued: “The effect is going to be short-term. As the country has started to ease lockdown, the telcos are confident to meet the deadlines laid out by the government for the nationwide roll-out of 5G network.”
In the long-term, the outlook remains positive, as reliable connectivity becomes a critical commodity. Coming out of Covid-19, millions of users worldwide will be more connected and more familiar with digital tools.
Maheria said: “Telco networks will have gained first-hand experience in dynamic network traffic management while businesses and their telco partners will have a better understanding of the challenges of homeworking.”
The need for robotic health workers, biometric virus predictors and AI health management tools will provide new use cases and investment justification for 5G. The situation will provide a shot in the arm for telco innovation around AI and machine learning and a catalyst for app and solution innovation ecosystems.”
