As the world continues to grapple with the deadly consequences of the COVID-19 pandemic, the tech and telecoms industries have been dealt a massive blow as telecom operators struggle to seize control over what could only be an inevitable decline in its revenue for 2020.
According to a report by Analysys Mason, the impact of the pandemic is expected to result in the sharp decline of telecom operator revenues by 3.4%, a world away from its pre-COVID-19 estimated growth of 0.7% at the dawn of the new year. Despite these concerning figures, telecoms has always been considered a robust and adaptable sector, so much so that it has also been predicted that it will bounce back stronger than before in 2021. Reports estimate the industry will be back on its feet with a year-on-year revenue increase of 0.8%, owing to increased demand in consumer broadband.
As mentioned previously, the resilience of the telecoms sector is largely due to its emphasis on remote working and entertainment which will undoubtedly result in the successful performance of fixed broadband services. Working from home or WFH has fast become the new buzzword in a COVID-19 era and is now considered the lifeblood of the tech and telecoms industries; a fact that will not disappear or simply be ignored once all this is over. As such, authorities have now realised the invaluable role of the telecoms sector in society and have implemented protective measures in order to protect these priceless assets to ensure business continuation in all aspects of life, especially those in healthcare and emergency services.
Even with this probable silver lining, it is important to note that analysis of the COVID-19 impact on various industries, specifically telecoms, is highly variable and would depend greatly on the progression of the pandemic. It would be safe to assume that the quarter affected the worst would be 2Q 2020, when the GDP would be expected to decrease by 11%. However, market output should begin to rise again in 3Q 2020 and would have returned to where it was initially in 4Q 2019 by the end of next year.
Rupert Wood, Research Director and co-author of the report said, “Telecoms should stay healthier than almost any industry in this crisis. Telecoms should show some of the strongest post-crisis investment, in part because cash flow is more resilient in the telecoms sector than it is most others, and because some governments will emphasise 5G and fibre in stimulus packages.”