Despite the huge impact it is having on economies across the globe, Covid-19 is likely to have a limited effect on the global telecommunications services business, according to research from IDC.
In its Worldwide semiannual telecom services tracker, IDC calculates that in 2020, telecom services spending will drop in all geographic regions to a total of $1.561tn.
The largest market, the Americas, is set to see what the analyst described as a “tiny” decline of 0.04% compared with 2019, while Europe, the Middle East and Africa (EMEA) and Asia-Pacific (including Japan) will dip more, mainly because of the larger price-sensitive audience in the low-income countries of Africa and Asia.
Asia-Pacific is set to see a 1.4% year-on-year dip in revenues to $465bn and EMEA is projected to have a fall of 1.2% annually to $474bn, while the Americas are forecast to generate $623bn, as they did in 2019. No growth is not expected in EMEA or Asia-Pacific before 2022, as users in emerging markets are expected to remain cautious about spending for some time.
IDC noted that the telecoms industries are among the most resilient sectors of the global economy during the Covid-19 crisis, but it cautioned that the economic impact from shutting down businesses, higher unemployment, frozen tourist activities and reduced consumer spending on non-essential products and services would have a negative impact on the market.
The mobile segment, the largest in the market, will post a slight decline in 2020 because of lower revenues from roaming charges, fewer mobile data overages due to the stay-at-home situation, and slower net additions, especially in the consumer segment, said IDC.
Telecoms services and pay TV will reach nearly $1.6tn by the end of 2020, a decrease of 0.8% compared with 2019. IDC expects the decline to continue in 2021, but at a somewhat lower degree. Although pay-TV services are set to be boosted by the lockdown but also affected by the economic downturn, IDC believes spending in this category will decline slightly.
Fixed data services spending will increase by 2.9% in 2020 as the need for more fixed internet connectivity, determined by the “great lockdown”, is likely to help this segment maintain growth, said IDC.
Spending on fixed voice services is forecast to continue to decline and will take an additional hit from the pandemic as users will are likely to drop fixed voice services to save money. Fixed IP voice will survive longer because the service is included in bundles, in most cases.
Summing up the trends it discovered in the research, IDC said the pandemic had changed some trends in the global telecom services market, but operators have quickly adapted to the forced changes in customer behaviour and have temporarily pushed aside some earlier priorities.
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“As the 5G revolution is being put on hold or delayed by the pandemic, the already proven technologies and business cases will keep the ball rolling in these uncertain times,” said Kresimir Alic, research director with IDC’s worldwide telecom services team. “Hosted VoIP/UCaaS, collaboration tools, SD-WAN, IoT, along with network optimisation and increased reliability, will keep consumers and businesses connected during the tough days of pandemic and global recession.”
However, IDC’s research appears somewhat optimistic compared with other analysts’ studies. In April 2020, a study by ABI Research found the industry’s overall shift towards global software-centric networks and operations would take a hit from the current global economic outlook and Covid-19, with telco cloud revenue from 5G core deployments expected to fall short of an earlier 2020 forecast.
ABI said telco cloud revenue from 5G core deployments would undoubtedly fall by 20-30% short of the forecast $9bn in 2020, and that the investment shortfall in modernising telco networks may be between $2bn and $3bn in the short term.