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Resiliency re-confirmed

The world is now revolving around digital services, yet the traditional suppliers of communications services do not appear to be the ones that will financially benefit, no matter how much time, effort and money they pump into 5G.

Recovery of demand in H1 2020 helped the global telecommunications market match the prior year’s revenue.

Worldwide telecommunications services and pay TV services revenues totaled USD 1.53 trillion in 2020, representing flat year-over-year growth, according to IDC. Worldwide spending is expected to increase by 0.7 percent in 2021 reaching a total of USD 1.54 trillion.

The COVID-19 pandemic demonstrates the resilience and value of the telecoms industry. New ways of working will persist beyond the pandemic, shaping future revenue opportunities, while the network-centricity of consumers will drive bandwidth requirements in that segment as well.

The COVID-19 pandemic was unquestionably the most important factor influencing the telco market in 2020. In the first six months of the year, the pandemic brought a notable decline to the market in the form of decreased subscriber numbers and lower services spending. This was caused by the strict lockdowns imposed by governments as well as the widespread pessimism and anxiety that forced people to cut spending on nonessential products and services. In the second half of the year, the demand recovered, fuelled by economic stimulus measures and the progress in vaccine development. The renewed optimism helped the global and regional markets to cover the losses recorded in the first half of the year and come close to equalling the prior year’s results.

Global regional servicesrevenue and YoY growth (Revenues in USD billion)
Global region 2020
Revenue
2019
Revenue
2020/2019
Growth
Americas 583 579 0.7%
Asia/Pacific 482 482 0.0%
EMEA 467 471 -0.8%
WW Total 1532 1532 0.0%

Although the revenue outcome in 2020 was neutral, the pandemic drastically changed the trends that have shaped the global telco market for a long time. Consumer fixed data services have suddenly become the most important type of connectivity, enabling home-bound people to work and entertain. Business fixed data services have temporarily lost momentum due to the migration of traffic to the consumer segment, but most of these connections were preserved as they were protected by long-term contracts. Fixed voice services saw a slight increase in dropout rates because some companies within the small business segments went bankrupt and more residential clients gave up their connections for cost-cutting purposes. Mobile services spending also declined slightly due to slower renewal of contract agreements, reduction of out-of-bundle spending, and a sharp decrease in roaming revenues due to travel restrictions. In the Pay TV segment, the migration from traditional Pay TV to Over-the-Top (OTT) services accelerated during the COVID-19 crisis, driven by increased consumption of video content and new OTT service launches.

Connectivity is expected to become an even more critical asset for households and businesses after the pandemic, as some of the habits adopted during the crisis (remote working, collaboration, online media consumption) are expected to become part of everyday life. The migration toward FTTP access is expected to accelerate in most of the country markets, while the business fixed data market will recover in the longer term as the economic recovery drives increased investments in the cloudification of enterprise business activities. Revenue growth in the mobile services space will be buoyed to a degree by 5G adoption, which will invite users to deploy more advanced data capabilities and uptake the content and services dependent on high-speed data connectivity.

The global telco market was put to a serious test in 2020 and it successfully passed. IDC believes that the lessons learned last year will help the industry to secure stable growth in the coming period.

 

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