Like other sectors, telecom is being impacted by the global outbreak of COVID-19. But the 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.
Global telecom market is feeling the heat
The sector will face sales challenges, due to retail store closures and supply chain disruption. It 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 are also 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.
Chinese telcos are the worst performers of the year
A look at the share price performance of the leading telcos shows that the worst hit companies are Chinese.
After tough times, future will be bright
China’s telecom market is already saturated with mobile subscription penetration expected to have reached 115% in 2019, according to GlobalData. China’s telecom services market has seen a drop of 15 million mobile subscriptions in Q1 2020. 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. 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. But this 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. Telco networks will have gained first-hand experience in dynamic network traffic management. Likewise, 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.
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