The long-term impact of the corona crisis for telecoms
The pandemic brought fundamental changes to the working world and consumer behavior within just a few short weeks. Some of the practices adopted during the pandemic will doubtless persist on into the future, and telecom and network equipment providers in Switzerland and elsewhere could benefit.
Looking back, crises are often seen as a catalyst for new things. Some 100 years ago, for example, the Spanish flu paved the way for creation of national healthcare systems in many European countries, leading to the formation of a global health authority that was the predecessor of today’s WHO.
The corona crisis will thus likely have a lasting impact on how people across all age groups work, shop and spend their free time.
Working from home more prevalent
Businesses will likely take advantage of the more widespread use of technology to further digitalize their processes, systems and sales channels. Work culture will be permanently affected by the crisis, as after weeks of unavoidable remote working, many companies will have abandoned their former stance against the practice, having seen that their fears of loss of control and employee productivity were unfounded.
Gartner survey on remote working post-corona
Source: Gartner survey of 317 CFOs and finance professionals conducted on March 30, 2020
A more digital society
The lockdown has changed consumer behavior, giving rise to virtual family get-togethers, watching movies together remotely, live streaming of concerts and video games (to mobile devices as well). Young people have discovered traditional phone calling as a means of keeping in touch with friends at the same time as many older people are getting into Skype, live streaming and online shopping. The habits of people all ages have been altered by the crisis, and certain new behaviors will undoubtedly live on after restrictions are lifted.
The huge rise in people working from home and the intensive usage of digital offerings have moved telecom providers to main stage. Both landline and mobile network infrastructure are more crucial now for the functioning of society.
Networks are undergoing a severe trial in terms of capacity and dependability. Swiss telecom providers are reporting an over 30% rise in landline bandwidth demand in some cases. The rise in mobile data traffic has been less dramatic due to increased landline usage.
Bandwidth becoming more valuable
Because of the changing ways in which people work and spend their free time, the perceived value of telecommunications infrastructure as an asset will likely increase, benefiting telecom providers and equipment suppliers over the medium to long term. The average price for bandwidth per subscriber has been in decline for years.
Change in bandwidth price in Switzerland
Source: BAKOM (index base 2012 = 100)
IT providers are reporting cloud adoption project inquiries in Switzerland and Europe and greater demand for routers and other network equipment items. Both large and small businesses will therefore likely already be preparing for the time after corona, in which more bandwidth capacity will be required than was before. Demand for network components and additional services from telecom providers such as virtual private networks is expected to favorably impact prices providing a good environment for Swiss telecoms.
This article is an excerpt from the Vontobel Research Report “Telecom and Telco Equipment” dated April 23, 2020. Authors: Mark Diethelm, Michal Lichvar, Arben Hasanaj