Recession recovery will be slow for telecoms industry: Ovum

Analyst group warns that there is no quick fix for telcos recovering from the economic downturn

Global research firm Ovum has released a report on the telecommunications industry warning that revenue growth is in decline for many "mature market operators," and slowing for those in emerging telco markets.

Telco Strategies for Recession and Recover indicates that despite the recent financial crisis not causing as much damage to companies as expected — especially in the Asia-Pacific region — it will still be some time before the telecommunications industry is once again stabilised.

"While the recession accelerated revenue decline, challenges such as market saturation, increased competition and regulatory intervention on roaming and termination rates won't disappear just because the economy picks up", said Ovum’s principal analyst, Clare McCarthy.

Despite the downturn, it was also found that user spending remained resilient, meaning that telecoms were no longer expendable for many consumers. In a global consumer survey of 39,000 people conducted by Ovum’s parent company, Datamonitor, it was found that although only 7.6 per cent of people stated that they would definitely cut back on spending, over a quarter of consumers indicated that they would consider cutting back on their telecoms spending, with a further 24 per cent undecided.

Ovum analyst Mark Giles said that telcos will respond to these figures with cost-saving measures, as well as looking for a greater return on investment in their decision-making processes.

"We expect activity, partnerships and possible acquisitions to occur, with telcos looking at over-the-top (OTT) services for consumers, as well as developing vertical expertise in ICT provision for enterprises," said Giles.

The report also notes that China and India are expected to show the strongest return to growth out of the region, but overall telco margins will continue to decline.

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