Telco industry expected to weather Covid-19 storm - Mobile World Live

Telco industry expected to weather Covid-19 storm

16 APR 2020

Telecoms operators were tipped to suffer a decline of 3.4 per cent in revenue in 2020 due to challenges stemming from the Covid-19 (coronavirus) pandemic, although the market should stay healthier than most other industries, Analysys Mason predicted.

The research company expects telecoms revenue across the board will dip this year, but noted this would be relatively short-lived, with a marginal recovery of 0.8 per cent tipped to begin from 2021.

Before the pandemic took its toll, Analysys Mason had forecast revenue growth of 0.7 per cent in 2020.

The revenue decline in 2020 is expected to be caused by large increases in unemployment, business closures, along with the effect of wider economic declines causing sharp drops in business services revenue.

Any impact will, however, be offset by consumer services, which account for the majority of operator’s revenue and will show “the greatest level of resilience during the downturn”, analysts stated in a report.

Limit impact
Going forward, Analysys Mason added operators should be able to limit impact on profitability, and while capex for 2020 was likely to fall due to constraints in building and supply chains, EBITDA margins will not be affected too much.

Rupert Wood, research director and co-author of the report, expects the industry to stay healthy despite the crisis, and “should show some of the strongest post-crisis investment”, with cashflow remaining resilient and governments expected to put emphasis on “5G and fibre in stimulus packages”.

While there were some positives to take from the report for the industry, Analysys Mason predicted operators in developed economies could suffer the most, with a forecast of “lost” revenue amounting to $40 billion per year in 2020 and 2021.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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