COVID-19, whose effects are being felt worldwide, is also having a significant impact on the telecom sector. As social restrictions continue and increase over time around the world, people are spending more time at home for work and play, and using much higher amounts of data.
Telecoms are focusing on improving network resilience and how COVID-19 is impacting their planned investments, particularly in 5G. Telecoms are also making changes to benefit customers who need their network services more than ever during this time. In some countries, data is being used as a tool to track and contain the spread of the virus.
Possible impact on telecom
Network utilization and flexibility:
- Network usage is growing rapidly, with many telecommunications companies reporting large increases. In some countries, the volume of voice calls is also increasing exponentially.
- Network reliability is an ongoing focus. Network infrastructure in Europe is witnessing spikes in disconnection rates, poor voice quality and slow connection speeds. In response, the European Union has attempted to mitigate potential outages by introducing video quality restrictions.
Changes for the customer:
- Telecommunications companies around the world are taking various measures to improve customer experience and provide people with access to their network services. For example, in the UK, telcos have increased capacity, are offering unlimited minutes, and are providing anonymous data to help track the spread of COVID-19.
- Telecommunications companies are also offering free or low-cost networking tools to help customers work from home. Similarly, business productivity platforms have begun offering promotional offers to meet the newfound demand.
- With stores closed around the world, telecommunications companies are adapting to new ways to sell products and serve customers, and self-care apps are becoming increasingly important.
- New smartphone launches may be delayed due to supply chain constraints. Contract mobile phone users may delay replacing their devices due to low consumer confidence.
Use of consumer data to track COVID-19:
- Data is increasingly being used by governments and organizations to track and contain the spread of the virus.
- Especially for China, due to its large and highly mobile population, the effectiveness of communication and data exchange has been crucial to screening infected individuals and controlling the epidemic.
Financial implications:
- While telecommunications companies have historically been less affected by recessions, some telecom companies may face cash flow issues over the long term, as in other industries.
- Telecommunications companies with sports-related media could see a negative impact on advertising-related revenues given the amount of sports league cancellations.
- Many companies are looking for long-term investments in their networks and, in some cases, are pushing forward investment in 5G due to its increased reliability and speeds.
- There may be a renewed focus on technology-based mergers and acquisitions to secure differentiated assets and, in some cases, opportunistic plays for innovative startups.
Key questions managers and boards should ask
- How do we ensure the reliability of our networks?
- When is the right time to invest in our network and 5G?
- How do we ensure a positive customer experience even with high pressure on our networks?
- How do we need to re-evaluate our cost structure to offset any medium-term revenue declines?
- How can we leverage automation across every aspect of our business (e.g. customer, employee, network resilience)?
- How are data privacy frameworks changing and how is this affecting our company’s policies?
Telecom leaders will be defined by how they respond to the response, recovery and growth dimensions of managing a crisis. Some important steps that follow from these three key points include:
- Test network reliability,
- Ensure call centers are equipped to handle volume increases,
- Consider the impact of government incentives on telecommunications companies,
- Consider opportunities for greater automation, such as low/no-touch options for customer-facing processes and internal tasks.
Source: Deloitte
