Telecom revenue in developed countries to drop 3.4% in 2020: Analysys Mason

Due to the expected impact of the COVID-19 coronavirus pandemic, analysts at Analysys Mason have reversed their expectations for the revenue telecommunications companies in 32 developed countries will see this year. That prediction has gone from an uptick of 0.7% to a decline of 3.4%, wrote analysts Stephen Sale, Rupert Wood, and Tom Rebbeck in a post on the market research firm’s website. The analysts expect revenues to return to growth mode next year, climbing 0.8% thanks in large part to demand for consumer broadband.

That uptick would still leave the market 4% behind where the analysts had previously forecasted for 2021. Not surprisingly, this shortfall will negatively affect profits, capex, and opex, particularly this year, the analysts believe. However, as revenues increase next year, capex should climb as well, they write. For example, the analysts believe fiber to the premises (FTTP) capex will decline this year but grow by 12% more in 2021 than previously expected.

Within this year’s expected decline, business services revenues will be hardest hit as establishments close or have their employees work from home. Fixed service revenues from business customers is expected to decline by 10% this year and by another 1% in 2021. Within the consumer space, fixed broadband subscriber growth will be lower in 2020 than previously forecast but will still happen. Subscriber additions should be greater next year than previously expected, the analysts believe, as the economy begins to recover and many people continue to spend more time at home than they did before the pandemic’s onset.

From a revenue perspective, fixed broadband revenues will decline by 0.4% in 2020 and increase by 2.1% in 2021, the analysts write. The fact that service providers will have trouble justifying price increases and may be slower than normal to connect new customers or upgrade services at least partially accounts for this year’s expected outcome. Nevertheless, the forecast for fixed broadband compares favorably to Analysys Mason’s expectations for mobile services, which the analysts believe will experience a 2.6% shrinkage in retail revenue in 2020 and a year-on-year increase of just 0.2% in 2021.

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