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Global telcos defy previous performance expectations

Better-performing Asia-Pacific operators lead charge driving analyst to adjust upwards previous forecast for worldwide connectivity services market

Though not expected to return to pre-Covid-19 spending levels before 2022, global telco operators are set to see worldwide spending on telecommunications and pay-TV services reach $1.565tn in 2020, representing a much smaller than expected decline of 1.1% year-on-year, according to IDC’s Worldwide semiannual telecom services tracker.

Indeed, the latest forecast is more optimistic than its predecessor, published only in September 2020, predicting that the market will return to growth in 2021 driven by better-than-expected results reported by telecoms operators in the Asia-Pacific region, especially in China.

IDC said this was the logical consequence of the Chinese economy’s fast recovery, which brought a new wave of optimism and boosted demand for telecommunications services. India, the third-largest market in the Asia-Pacific region, also witnessed unexpectedly positive movement, and although the forecast for that market remains negative, it has improved by several percentage points and thus enhanced the results for the entire region.

By contrast with the booming Asian markets, IDC has not made significant changes to its forecast for the Americas and Europe, Middle East and Africa (EMEA) markets. It noted that the original scenario it painted in September, which presumed a slight decline in spending on telecoms services due to the economic downturn caused by the pandemic, seems to be coming true.

“The telecom services segment is weathering the Covid-19 storm better than other ICT segments. Connectivity has been the linchpin in keeping individuals connected and businesses operational during this unprecedented time”
Carrie MacGillivray, IDC

IDC said it persisted with its view that the introduction of new lockdowns in the largest European countries should not have an immediate impact on the telco market because telco services have been secured by longer-term contracts. Moreover, the analyst predicted that a bigger decline in demand was not very probable because many European governments had imposed additional measures aimed at protecting businesses and the general population from the economic impact of the pandemic.

Overall, IDC said the first-half 2020 update of the Worldwide semi-annual telecom services tracker verified that the telecommunications industry remained one of the most resilient sectors of the global economy during the Covid-19 crisis.

“The telecom services segment is weathering the Covid-19 storm better than other ICT segments,” said Carrie MacGillivray, group vice-president and general manager for worldwide telecom, mobility and IoT research at IDC. “Connectivity has been the linchpin in keeping individuals connected and businesses operational during this unprecedented time. Covid-19 will be a case study we will reference for years to come as the start of the future of connectedness.”

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