Global telecos to lose $40bn revenue to COVID-19

By Omobayo Azeez

Telecoms operators were tipped to suffer a decline of 3.4 per cent, equivalent to $40 billion in revenue in 2020 due to challenges stemming from the Covid-19 (coronavirus) pandemic.

Despite this loss, the market is projected to stay healthier than most other industries that have received heavier blows from the impact of the deadly disease, Analysys Mason has predicted.

The research company expects that 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 started taking took its toll on the global telecoms sector, 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.

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, Analysts 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.