Operators could see 10% negative revenue impact

10 September 2020 | Melanie Mingas


Telecommunication operators could see up to a 10% “annual negative revenue impact” as a result of the Covid-19 recession, with some services requiring 18 to 24 months to return to pre-Covid levels.

While the global downturn will impact all digital infrastructure companies, the intensity has been more acute in telecommunication services to date, with Q1 revenues declining an average 0.9%. Further, decline patters correlated with lockdowns.

Analysing data by region, Europe saw “the most important impact” due to declines in roaming revenues and equipment sales due to store closures, as well as the postponement of in-premise customer installations. These observations were echoed in the most recent financial results from the continent, which were the first to include a full quarter of Covid-19 trading conditions.

However, dominant operators in several African markets appeared to be performing “fairly well” under the current conditions.

The findings were published by ITU this week following an “economic experts roundtable” in July.

“A primary motivation for assessing this issue was to understand how telecommunication networks have performed in the face of the pandemic-triggered lockdown,” the report read.

“Along those lines, even if networks performed appropriately, could we identify any potential points of failure to be considered in future planning? Another concern that triggered the need to address the issue of impact on digital infrastructure was to understand whether the financial disruption caused by the pandemic was going to have an impact on the rate of deployment of advanced telecommunication technologies, such as 5G and FTTx,” it continued.

Building further on this point, ITU analysed how this could impact countries differently. For example, OECD countries have reached a 5G coverage of 34%, while FTTx household penetration is at 34.61%.

Posing the case for investment to continue, it concluded that countries with a higher level of ultra-fast broadband infrastructure deployed – for example, those with higher penetration of optical fibre – have appeared to handle the increase in traffic better.

ITU continued to say that its evidence showed “the higher the ultra-broadband penetration in a given country, the less the increase in latency and the decline in download speed from the levels before the pandemic”.

 Traffic and capex

Compounding the impact of these factors, increased traffic has accelerated capex as operators rushed to expand capacity over recent months, while other costs are being postponed.

By way of reducing cash outlays, financial pressures could see new infrastructure models such as passive, rural and RAN sharing, becoming more prevalent.

ITU’s research isn’t the first to sound such warnings. 

In April, Omdia released insight predicting a US$51 billion shortfall in mobile industry revenue this year. It also said global 5G subscriptions for the year would be 22.1% lower than previous forecasts.

Speeds and outages have also been hit as Capacity has reported in recent months.

Outages increased 63% in March over January, and remained elevated through the first half of 2020 compared to pre-pandemic levels. In June, 44% more disruptions were recorded compared to January.

Meanwhile some countries have seen broadband speed declines of 40 – 50% according to data from In Latin America in particular, could face “significant negative impact” if the reductions in network speed and quality seen during Covid-19 lockdowns become a permanent fixture, according to the Telecoms Advisory Service.