As expected, the coronavirus pandemic will cause a significant decline in telecoms revenue. In fact, revenue for telecoms operators will fall by 3.4% in 2020 compared to 2019, before returning to growth (0.8%) in 2021, according to a report published by Analysys Mason.
The researcher had previously forecast growth of 0.7% this year and 0.8% in 2021. Due to the Covid-19, the overall impact for operators in developed economies is “lost” revenue of more than $40 billion in each year.
Nevertheless, the report argues that telecoms are a relatively resilient sector and will perform ahead of general GDP trends. Analysys Mason expects telecoms to account for 2% of GDP in 2020, an increase from 1.9% in 2019.
“Consumer telecoms services, which account for the majority (68%) of telecoms revenue, tend to be relatively resilient during economic downturns, but large increases in unemployment, business closures and the overall decrease in economic activity will cause a sharp decline in business services revenue,” said Stephen Sale, Research Director at Analysys Mason and co-author of the report.
Operators should be able to limit the impact on profitability. Operator capex is likely to fall in 2020 because of constraints in the ability to build and because of disruption to supply chains. The pandemic will reinforce and accelerate existing downward opex trends rather than introduce new ones. Profits will fall, but Analysys Mason does not expect overall EBITDA margins for the sector to decline by more than 2% points.
“Telecoms should stay healthier than almost any industry in this crisis. They should show some of the strongest post-crisis investment, in part because cashflow is more resilient in the telecoms sector than it is most others, and because some governments will emphasise 5G and fibre in stimulus packages,” concluded Rupert Wood, Research Director and also co-author of this report.
Telecoms should show some of the strongest post-crisis investment, in part because cashflow is more resilient in the telecoms sector than it is most others” Rupert Wood Research Director and also co-author of this report