Impact of COVID-19 on the telecom industry

The COVID-19 pandemic—perhaps more than any other event in human history—has demonstrated the important role that telecommunications plays in keeping businesses, governments, and societies connected. Because of the economic and social disruption caused, people around the globe have relied on technology for information, social distancing, and working from home.

The telecommunication sector has been generally exempted from major COVID-19-related restrictions, as it is recognized as an essential service. Some telecom companies have been strengthened by the short-term spike in data traffic and increased use of broadband services, as more people started working from home and relied on video conferencing to hold meetings.

Communication service providers (CSPs) have responded with a sense of urgency, purpose and empathy: extending network capacity by 30-50% to support secure remote working for businesses and virtual classrooms; implementing remote and virtual agent strategies to deliver customer care amid escalating traffic; guaranteeing continued service to residential and small business customers unable to pay their current bills, waiving late fees and opening Wi-Fi hotspots.

Most clients have effective business continuity plans, effective operational procedures, and supply agreements for key processes. As a result, operational performance is normal, with service levels exceeding 99.95 percent. As people moved away from city centers amid the work-from-home arrangement, data density became more scattered, and thus networks became less congested.

Telecom demand spikes have led to short-term revenue upticks. Clients—including mobile network operators (MNOs) and internet service providers (ISPs)—have experienced an uptick in revenue from increased usage. This benefit has been shared across the telecom value chain. None of the infrastructure clients have reported termination of major customer contracts due to COVID-19.

COVID-19 put pressure on emerging market currencies and economic growth. However, most clients did not see solvency risks triggered by currency depreciation. Neither did they encounter significant issues on the conversion of local currency to meet payment obligations offshore. MNOs felt the FX impact immediately as their revenues are denominated in local currencies. Other clients, such as tower and data center companies, mostly have five to ten-year contracts denominated in hard currencies, but are exposed to FX risk indirectly through the creditworthiness of their MNO clients.

Merger and acquisition (M&A) activities stalled as buyers became increasingly prudent in using cash. MNOs were reluctant to commit to new wholesale contracts with infrastructure operators. Infrastructure operators such as tower companies and energy service companies (ESCOs) saw a drop in new MNO contracts. Their MNO clients were less willing to take risks on network expansion or continuing switchover of 4G equipment to 5G.

With fewer stores operating around the globe with less footfall, telecom companies are adopting new ways to sell products. With more customers going to the online marketplace, this is the right time to leverage technologies such as Marketing (Data) Analytics, AI-Machine learning to create a self-service marketplace, which will recommend and educate customers on new offerings.

The telecom industry has been less impacted in the financial markets. However, the industry will need to respond to several common challenges, including: significant pressure on operating expenses, with rapid cost take-out initiatives; prioritization of critical capital expenditure aligned to revenue and business continuity; supply chain optimization in the face of equipment and labor supply volatility; revenue and cash management amid an economic downturn.

CSPs will likely accelerate their digital transformation, institutionalizing new ways of working. Consumers and businesses will demand a richer, more consistent omnichannel digital experience with an emphasis on digital self-service. We will see more use of artificial intelligence to augment call center agents and retail stores, providing for greater customer insight and real-time decisions.

We expect to see a renewed sense of urgency in shifting to hybrid cloud IT and network architectures and operations with extreme automation. Changes to accommodate major shifts in workload, load balancing and more infusion of AI/machine learning (ML) into the network at the Core, Edge or vRAN will become key to investment strategies and sustained operational efficiency.

As businesses establish their own new normal, 5G and Edge computing will be necessary to deliver the automation, performance and cognitive insight required by many industries. Cybersecurity will be high on the agenda, as the post-COVID-19 scenario will bring an increased level of digital access to businesses and information around the globe.

Glow’s role

Here at Glow, we have been at the forefront of adopting COVID-safe practices while dealing with clients and customers. We have gone out of the way to make sure services aren’t disrupted as a result of the pandemic and exceeded sales targets with a healthy bottom-line. We believe in investing in a safe environment, ultimately resulting in a secure future for everyone.