Worldwide spending on pay-TV and telecommunications services will reach $1.55 trillion in 2020, a decrease of 1.4% year-on-year, but the market will start to recover next year.
That’s according to the IDC Worldwide Semiannual Telecom Services Tracker. In August, IDC completed a comprehensive analysis of the results reported by global telcos for the first half of 2020, which showed that the telecoms industry is one of the most resilient sectors of the global economy during the Covid-19 crisis.
Increased demand from the consumer segment during lockdown, as people worked, schooled and entertained more at home; government measures aimed at protecting businesses and consumers from the economic impact of the pandemic; and the fact that telco services have been secured by longer-term contracts all helped the telcos avoid major losses in the first half of the year.
However, predictions for the second half of 2020 aren’t as optimistic, as operators anticipate a decline in revenues due to an economic downturn that would shut down businesses, raise unemployment, freeze tourist activities and force people to cut spending on non-essential products and services. As a result, IDC has decreased its market forecast for 2020 by one half of a percentage point.
The negative trend is expected to impact all global regions, but not at the same magnitude. Revenue in the Americas, the largest regional market, is forecast to decline by 0.5% in 2020. Europe, the Middle East, and Africa (EMEA) and Asia/Pacific (including Japan and China) will drop somewhat more primarily because of the larger number of price-sensitive customers in the low-income countries of Africa and Asia. In the remainder of the five-year forecast, EMEA and Asia/Pacific are also expected to recover somewhat more slowly than the Americas because the customers in emerging markets are expected to remain cost-cautious for a longer time.
Kresimir Alic, research director with IDC's Worldwide Telecom Services team, commented: "In the first half of 2020, operators maintained solid resilience in large parts of their operations. However, as countries around the world continue to struggle with new waves of Covid-19 and scientists are still quite far away from a solution to the problem, telecom operators are now focused on efficiency improvements to mitigate the expected negative impacts during the rest of the year. Together with additional cost savings, including lower capital expenditures following restrained investment policies, this can still be translated into operative EBITDA growth."