Report: Covid-19 to hit Telco revenues

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Covid-19 will lead to a significant decline in telecoms revenue. Revenue for telecoms operators will fall by 3.4 per cent in 2020 compared to 2019, before returning to growth (0.8 per cent) in 2021, according to an impact assessment report published by Analysys Mason.

Analysys Mason had previously forecast growth of 0.7 per cent in 2020 and 0.8 per cent in 2021. The overall impact for operators in developed economies is ‘lost’ revenue of more than $40 billion in each year.

The report argues that telecoms is a relatively resilient sector and will perform ahead of general GDP trends. Analysys Mason expects telecoms to account for 2 per cent of GDP in 2020, an increase from 1.9 per cent in 2019.

“Consumer telecoms services, which account for the majority (68 per cent) of telecoms revenue, tend to be relatively resilient during economic downturns,” said Stephen Sale, Research Director and co-author of the report, “but large increases in unemployment, business closures and the overall decrease in economic activity will cause a sharp decline in business services revenue.”

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 we do not expect overall EBITDA margins for the sector to decline by more than 2 percentage points.

“Telecoms should stay healthier than almost any industry in this crisis,” said 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, and because some governments will emphasise 5G and fibre in stimulus packages.”


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