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COVID-19’s impact on the telecom sector

Wednesday, December 23, 2020 by eFax Team

COVID-19’s impact on the telecom sector

The growth of telecommunication has been noticed over the past few decades in Australia. Mobile service revenue in Australia is projected to register a 3.7% CAGR increase by 2024.

It's not hard to see the telecommunication industry's growth and the incredible advancements that have been made. Everyone can remember a time where we had to dial up to the internet to send an email and weren't able to use the landline at the same time. Today, you can send an email just with a smartphone and voice commands. 


With over 14.7 million internet subscribers, Australia has a very high level of internet penetration, reaching 88 per cent of the total population, in 2018. Not even COVID-19 has managed to impact the telecom industry growth negatively. 

Overview of the Telecom Industry

(Paragraph) The telecommunications industry has proved to be a core infrastructure service to national economies worldwide. The Australian telecommunications industry is no different; it is expected to remain steady thanks to the industry's adaptive nature amid an uncertain economic outlook due to the COVID-19 pandemic.

Mobile subscriptions are foreseen to grow in the 2020-25 period, while fixed broadband subscribers are also anticipated to increase at a somewhat lower average rate over the same period.

Of the primary segments in the telecommunication industry, wireless communication is growing the fastest. However this isn't to say there isn't still room for growth. According to the Speedtest Global Index rankings, the year 2019 Australia placed 32 out of the 35 OECD nations and 68th in global internet speed rankings. The broadband access in Australia, as with many other countries, has dramatically improved since the world wide web was first introduced in 1989.

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Pre-Coronavirus Changes in the Telecom Industry

The changes we have seen over the last decade have been mind-blowing. AI and machine learning have pushed Telecoms into the modern era. The Internet of Things (IoT) has led to a smart world where we can control homes with our smartphones or even our voice, all of which require telecommunications. 

Companies were slowly going through the digital transformation, swapping paper and physical storage space for cloud solutions. This required a more reliable and faster broadband connection. In many ways, COVID-19 has forced companies to take on the digital transformation that would have, at some point, had to occur. 

The Telecom Sector and COVID-19

For many, changes happened overnight as strict lockdowns were imposed. Within just days, people had to get used to working from home, learning from home, and communicating with family members via phone or video calls. Telecoms were essential for several industries if businesses had any hope of remaining open. Once realizing that confinement was going to last for longer than initially expected, companies started to turn to telecoms to continue their operations during the coronavirus crisis. Even healthcare systems began to quickly see the benefits of Telehealth, the use of online consultations.

Studies have shown that broadband traffic in Australia has increased by 70 per cent compared to pre-COVID-19 levels. This would lead consumers to assume that telecom companies have profited during COVID-19; however, this is not necessarily true. While demand has increased, so has consumer behaviour, which has an impact on telecom company revenues. 

During the summer months, attention has been focused on the loss of revenues in the tourism industry. It has also had severe consequences on those telecom service providers that rely on revenue from international traffic. According to the Telsyte Australian Mobile Services Market Study, the annual mobile services revenue might suffer a further decline of up to 10 per cent by the end of 2020 as the Average Revenue Per User declines partially due to travel bans. 

We have also seen a shift in geographical behaviors. Knowing lockdowns were just around the corner; many people went to their second homes in rural areas. This put a more significant strain on the infrastructure in these areas that weren't ready for so much traffic. 

Financial Implications of COVID-19 and International Telecom Services

Even though the telecom sector is experiencing losses due to COVID-19, it hasn't been hit as hard compared to others. The impacts and implications of COVID-19 on the telecommunications, media and technology (TMT) industries are different from other sectors. The Telecommunications Services subdivision is anticipated to be moderately affected by COVID-19.

For example, Australian operator Telstra forecasts a total revenue to decline by 3.8 per cent to 11.1 per cent year-on-year. While the net profit for the 2020 fiscal year was down 14.4 percent and the revenue fell 6.1 percent to AUD 23.7 billion.

Overall, the telecom sector is expected to suffer from losses of around 3.4% in developed countries. Nevertheless, the future of the telecommunications industry is looking hopeful. In 2021, growth in the telecom industry is set to increase by 0.8%, which means the industry, on the whole, will only be 4% behind the original estimations. This implies that in 2020 the telecommunications industry, though not meeting expectations, was not as bleak as it could have been. 

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The Future of the Telecommunications Industry

When estimating the growth of telecommunications, it's important to pay close attention to the value chain. A value chain is a set of industry-specific activities that enable a company to provide a good or service. The telecom value chain consists of the following aspects that may have an impact on telecom industry growth in the future:

Network & Facility Construction

Fortunately, as telecommunications is considered essential, construction hasn't been limited due to confinements. On the contrary, because of the high unemployment in other sectors, construction has benefitted from more available workers.

There have been problems with the short-term supply of some materials and equipment. Again, as China was able to resume exports relatively quickly, there shouldn't be such an apparent impact on telecommunications construction.

Operations and Maintenance

Generally speaking, operations and maintenance went along unaffected. Companies had enough inventory to maintain levels of service. As restrictions eased, companies were able to restock and ensure they would be prepared in case lockdowns began again.

 Companies have successfully managed the surge of data during the confined months; this has certainly been helped by people moving to second residents further out of the city centre, therefore scattering data density.

Service Commercialisation 

There are two sides to the value chain regarding service commercialisation. On the one hand, short term revenues have increased because of the increase in telecom usage. On the other hand, mid-term revenues might suffer as major clients such as schools and universities and a lot of the tourist industry request a suspension of activities.

Financing

For international telecom services, the biggest concern will be the stability of foreign exchange, more so on the cost of importing network equipment. We may also see a pause in raising private capital, mainly because of the uncertain times we are still facing.

Government Assistance

In order to help the mobile telecommunications sector in Australia prepare the shift to the 5G network, the Australian government has decided to invest almost AUD30 million (USD22 million).

This investment is part of the government’s Job Maker Digital Business Plan, announced for the 2020–21 Budget, and it includes:

  • $22.1 million to develop the Australian 5G Innovation Initiative to support the rollout of 5G, such as building more mobile towers, cells and procuring new spectrum to assure the delivery of 5G

  • $1.8 million over two years to fund systems that will provide a more effective spectrum allocation,

  • $5.3 million over two years to modernize the digital spectrum licence scheme.

So, Can We Expect Telecom Industry Growth?

In 2021, telecommunications for consumers, both mobile and fixed, is set to remain fairly similar. We can expect to see growth within the telecom sector within businesses, digital services, and video. COVID-19 has clearly shown companies that we can no longer rely on technologies from the past. 

Take fax for example. One may think of the fax machine as an outdated piece of technology, yet there are still approximately 46.3 million fax machines worldwide with 16.9 million faxes sent per year. The coronavirus and company lockdowns have meant that millions of fax machines have been left unused. This is where eFax becomes a massive benefit for companies across the globe. Without the need for fax machines, eFax can send fax documents over the Internet. Some advantages include:

  • not having to spend on printing costs - taking advantage of electronic signatures

  • able to send large files to multiple recipients

  • have access to your faxes on your mobiles, tablets and laptops

If you are interested in learning more about the benefits of eFax and how your company can gain—before the inevitable second wave of lockdowns, call us on 1800 283 361 or you can click here to start your 30 Day Free Trial.

eFax is NBN compatible making it future proof for coming technology. Online faxing is hassle free, and it can be used to send and receive faxes quickly by using your own personalised online dashboard, another option is to send and receive fax using email or connect through the eFax app.

With our NBN compatible digital faxing solution you can reach out to people regardless of where they are.

 
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eFax Team - eFax Team

eFax has grown to become one of the world's largest providers of Internet messaging services, offering fax by email to more than 11 million subscribers. 

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