Telecommunications companies across the globe may have grown immune
from the effects of the recent economic crisis, but the debilitating
strength of the credit crunch may have stunned some markets’ growth, or
have stopped it altogether, according to Ovum.
Financial metrics
across incumbents in Asia-Pacific generally declined, although
performance is still relatively stable as revenue sources shift from
legacy services to mobile, broadband and other new services. Recession
took hold later in this region, with many markets suffering in
second-quarter 2009. China and India are expected to show the strongest
return to growth, but overall telco margins will continue to decline.
“While the recession accelerated revenue decline, challenges such as
market saturation, increased competition and regulatory intervention on
roaming and termination rates won’t disappear just because the economy
picks up”, said Ovum’s principal analyst Clare McCarthy.
One question for telecoms operators as the downturn hit was how user
spending would be affected. As the quarters went by it became apparent
that user spending was fairly resilient to the economic downturn,
reflecting the fact that for the majority of users, telecoms is no
longer expendable.
A global consumer survey** of 39,000 people conducted recently by
Ovum’s parent company Datamonitor indicated that while they do show
some degree of resilience in consumer telecoms spend, (with only 7.6%
of consumers indicating that they would definitely cut back on
spending), over a quarter of consumers surveyed indicated that they
either would, or consider cutting back on their telecoms spending, with
a further 24% undecided. When asked which services they would look to
cut back on, over 30% indicated that they would consider downsizing
their mobile phone tariff, while 24% saw fixed voice as an area where
they could make cuts. See Figure 1 attached for details.
Telcos are responding with cost-saving measures. In addition to
cutting opex, telcos have also sought to reduce their capex, either
through postponing or cancelling investment projects, or simply through
utilizing higher hurdles for return on investment in their
decision-making processes. They are also accelerating employee release
programs and stockpiling cash. Many telcos are emerging from the
downturn with healthier balance sheets than when they entered, as well
as significant cash balances.
Ovum believes those that prudently managed their finances during the
downturn will grow, but should be wary of initiating M&A programs
designed solely to grow top-line revenues. Targeted mergers,
acquisitions and partnerships that fill key skill-set gaps will be the
flavour of telecoms going forward.
Ovum analyst Mark Giles said: “We expect activity, partnerships and
possible acquisitions to occur, with telcos looking at over-the-top
(OTT) services for consumers, as well as developing vertical expertise
in ICT provision for enterprises.”
http://www.enterpriseinnovation.net/content/telcos-saved-recession-not-aftermath-woes-report
