Somewhat positively impacted by the COVID-19 pandemic, telecommunication services spending is expected to reach $1.6 billion in 2020 with nearly flat growth compared to 2019, according to IDC. The telecom market is not growing in 2020, but at least it will not shrink.
On the positive side, IDC has observed increased use of telecom services due either to nationwide lockdown or work-from-home policies that many companies have implemented for their employees to follow.
However, this doesn’t directly translate into a surge in telecom spending due to many households having unlimited voice calls and unlimited Internet services. Commercially, the spend is inhibited due largely to the harsh economic impact that a number of industries are enduring. Businesses are either faced with temporary shutdowns or are closed altogether.
Transition to IP and Cloud Services
The continued transition to IP and cloud services with lower ARPU as well as the reduction in GDP growth in the second half of 2020 are key factors that challenge the market, according to IDC. From a mobile perspective, there will be an additional negative impact including slower net adds, especially in the consumer segment, as retail outlets are closed during lockdowns making it difficult to activate net new devices and plans.
“COVID-19 is leading to a lot of uncertainty around the spending impact on various technology markets. We expect the telecom services market to weather the current conditions better than other elements of the ICT market,” said Carrie MacGillivray, group vice president and general manager, Worldwide Telecom, Mobility, and IoT research at IDC. “The COVID-19 pandemic is highlighting the importance of connectedness. Telecom services are the common thread keeping us united as we weather this crisis.”