Analysts at IDC Canada predict that the COVID-19 pandemic will substantially impact the telecommunications services market.
The analytics firm expects there to be negative growth in 2020 before eventually rebounding in 2021, as noted in its latest report. IDC Canada predicts that there will be a decline of $2 billion CAD in revenue.
New stringent containment and lockdown measures across the country have led to a rapidly deteriorating economic outlook. The firm notes that recent forecasts indicate a steeper decline when compared to the financial crisis of 2008.
“The impact of the COVID-19 crisis represents the most significant deceleration in ICT spending growth Canada has experienced in modern time” said Lars Goransson, the managing director at IDC Canada, in the report.
Further, wireline voice services are expected to be hit the hardest by the virus in terms of the telecommunications sector.
“Although we predict all telecom market segments will show reduced revenue from the previous forecast, some positive factors will moderate the downturn such as the exploding need for conferencing, remote collaboration and increased broadband access,” the report notes.
Internet services are expected to be one of the most insulated markets during the pandemic. It’s interesting to note that although internet service providers are experiencing an unprecedented increase in consumption, higher usage does not translate to revenue growth due to the elimination or expansion of data caps currently provided by most carriers.
The report notes that to meet increased network capacity needs, service providers are likely upgrading their infrastructure to handle the bandwidth. The costs for these expansions will have to be recovered in 2021.
IDC Canada expects the telecom market to get back on track in 2021 if most businesses return to normal and people return to work. However, it’s important to note that nothing is certain because the duration of the pandemic is still unknown.
Source: IDC Canada