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Global telecoms industry lost $43 billion in 2020

Yehia El Amine

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global telecoms industry

While people, companies, and governments around the world leaned on connectivity to keep the lights on, many expected that the global telecoms industry would be riding high and mighty during one of the hardest years humanity has ever faced.

Contrary to that, the reality of the situation is much bleaker than many could imagine.

Telcos around the world took a beating during 2020, with the COVID-19 pandemic shaving off a whopping $43 billion in revenues when compared to 2019, a recent study by UK-based global consulting and research firm, Analysys Mason.

“While the outlook for 2021 is better, spurred by booming activity in the connectivity and remote working segment, it will take the industry up to 2023 to return to its pre-Covid-19 level,” the study said.

The colossal dip in global telecoms industry revenues represented a 2.7 percent overall drop, mainly due to lockdowns enacted by governments around the world, which stagnated major services such as roaming, pre-paid, and voice calls. 

Analysys Mason expects that a third of this loss will be recouped in 2021 with growth of USD13 billion (up 1 percent on 2020), but global telecoms revenue will not exceed 2019 levels again until 2023, which is not enough to relieve operators from the ongoing pressure of adaptability.

Telcos were very agile in responding to the sudden shift in worldwide habits, enacting the necessary strategies and business models to keep the world connected, but many consider 2021 to be a fairly grim financial year for the industry at large.

While the pandemic skyrocketed the demand for connectivity, the growth wasn’t able to single-handedly carry the weight of other segments. “A lot of operators will be pleased to start reporting growth from April, but we are expecting pretty gloomy times in 2021,” Analysys Mason’s Director for Consumer Services, Stephen Sale, said.

In parallel, Sale suggested that all this coupled with the cessation of many government support schemes which had helped keep in trouble players afloat in 2020, there will likely be a rise in business failures in the sector.

2020 was expected to be telecoms’ big year, as operators were ready to push hard for 5G rollout, the pandemic severely hampered those efforts and resulted in current fifth generation network deployments to offer limited improvements to its 4G counterpart.

This was primarily caused due to companies reallocating funds earmarked for 5G rollout and development, to be placed to reinforce and strength current networks and systems to meet the overly increasing demand for connectivity while people were stuck within their homes.

This will drastically push 5G-oriented strategies further until the global telecoms industry can lick its wounds and re-establish their revenues streams to pre-Covid times.

This blow was echoed by Analysys Mason, who stated that while 5G was one area that had been put forward as a potential economic savior in this current climate, unfortunately, this has been overstated.

“Even with widespread rollouts this year expected to boost both direct average monthly revenue per user (ARPU) and also generate major opportunities with industry, amid the sustained economic crisis the world is enduring, customers remain unwilling to pay a premium for 5G at this time,” the study highlighted.

As traditional revenue streams have spiked downwards, and 5G failing to become the champion telcos had hoped for to elevate the heavy losses inflicted by the pandemic, operators need to exercise haste in adapting their business models to deliver broader services across the board.

Head of operator services and Internet of Things (IoT) research at Analysys Mason, Tom Rebbeck considers that the answer is to emulate the strategy of Orange Telecom.

“It will probably be an operator that has already invested in IoT. I would expect it to be one of the larger ones,” Rebbeck explained; the French telecom giant already garners 40 percent of its revenue from IT rather than from traditional telecoms.

However, he added that even with this kind of adaptation, the health of the industry will flounder. This year “gets worse before it gets better,” he remarked, as much of the government funding has kept many companies going dries up. This means potentially that “in 2021 lots of them will be put out of business.”

The global telecoms industry has a lot of work to do to recuperate from the losses of 2020, it will need to innovate and flush out its legacy offerings, especially as worldwide competition grows, and the race for 5G speeds up even more.

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Yehia is an investigative journalist and editor with extensive experience in the news industry as well as digital content creation across the board. He strives to bring the human element to his writing.

Telecoms

BT slapped with a lawsuit over overcharging elderly customers

Inside Telecom Staff

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British telecom giant BT is being slapped with a class action lawsuit over allegations that it has been overcharging elderly customers for eight years.

The lawsuit came in the wake of a 2017 report from telecoms watchdog, Ofcom, which found that the operator had been overcharging 2.3 million of its landline customers since 2009.

Since then, BT reduced the price of its landline service by £7 ($9.48) a month.

However, campaigners at the helm of the lawsuit argue that “loyal customers” are yet to be compensated.

London-based law firm Mishcon de Reya has filed a £600 million litigation to the Competition Appeal Tribunal (CAT).

If successful, this would result in each of the 2.3 million overcharged customers receiving payments of £500 each.

The case represents customers who purchased a BT landline contract but did not also take BT broadband or pay TV packages.

“Ofcom made it very clear that BT had spent years overcharging landline customers but did not order it to repay the money it made from this,” Campaigner Justin Le Patourel, founder of consumer group Collective Action on Landlines (CALL) and a telecoms consultant who worked for Ofcom for 13 years, told reporters.

Le Patrourel added that the compensation process begins with the filing of this claim.

In response, BT issued a statement “strongly disagreeing” with the claim that it had engaged in anti-competitive behavior and intends to defend itself “vigorously” in court.

“We take our responsibilities to older and more vulnerable customers very seriously and will defend ourselves against any claim that suggests otherwise,” a BT spokesperson said in the statement, adding that “for many years we’ve offered discounted landline and broadband packages in what is a competitive market with competing options available, and we take pride in our work with elderly and vulnerable groups.”

BT highlighted that it regrets being drawn into litigation on a topic which Ofcom considered more than three years ago. “At that time, Ofcom’s final statement made no finding of excessive pricing or breach of competition law more generally,” the operator said.

Ofcom’s 2017 report had uncovered that the wholesale price of providing landlines had dipped by at least 25 percent since 2009, but that all major landline providers in the UK had hiked line rental charges upwards between 28 percent and 41 percent.

Initially, Ofcom strongly criticized BT for raising prices, noting that customers were being given “poor value” for money. It added that many of the affected customers had “been with BT for decades” and were more likely to be old, on low incomes and vulnerable.

As a result of the watch dog’s review, BT announced that it would slash its landline prices by £84 a year.

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Telecoms

Saudi’s CITC fines several operators for violating telecom laws

Inside Telecom Staff

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Saudi Arabia’s Communications and Information Technology Commission (CITC) fined late last week, a number of local telecoms providers for violating several telecommunications laws in the Kingdom.

CITC imposed fines reaching more than SR40 million ($10.67 million) for making promotional offers in violation of CITC’s decisions, using frequencies without licenses, failing to comply with the CITC’s decisions regarding a number of user complaints, violating SIMs, and failing to provide CITC with information required within the specified deadlines.

The penalties targeted each of STC, Etihad Etisalat Co. (Mobily), Mobile Telecommunication Company Saudi Arabia (Zain KSA), and Etihad Jawraa Telecommunications and Information Technology Company (Lebara Mobile KSA).

STC was fined SR31.4 million, Mobily was handed a fine of SR1.2 million, Zain KSA (SR996,000), and Lebara Mobile (SR366,000), while other operators were fined SR6.16 million.

Other violations include causing damage to public telecommunications networks by cutting off a communication cable, sending Spam messages, and providing SMS service without obtaining a license.

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Telecoms

Three Angolan operators cleared for IPO listing with more to come

Inside Telecom Staff

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Three Angolan operators cleared for IPO listing with more to come

Angola has cleared the way for three state-owned telecoms companies to be listed on Initial Public Offerings (IPOs), according to a presidential decree published on Thursday.

Local media have reported that two presidential decrees have authorized IPOs for the privatization of state assets in TV Cabo Angola and Multitel respectively. However, a third decree has sanctioned a “limited tender by prior qualification” for the government’s shares in internet service provider Net One.

It is important to note that all three orders grant the country’s finance minister lead authority over privatization efforts, which include decisions over the validity and legality of the process.

Angola’s sale of its stakes in several telecoms companies is part of President João Lourenço’s strategy to oust his predecessor’s family from the country’s business community.

Angola Telecom, which is wholly owned by the government, holds a 49.27 percent stake in TV Cabo Angola and a 30 percent stake in Multitel. Another 60 percent of the latter firm is held by state-owned enterprises, with oil firm Sonangol taking 40 percent and Banco de Comercio e Industria (BCI) holding 2 percent.

The entire 90 percent state-held stake in Multitel is set for privatization, along with 51 percent of Net One held by MSTelcom, which is wholly owned by Sonangol.

In parallel, several media reports have surfaced noting that five other Angolan operators will also be auctioned off during 2021 under the government’s privatization initiative. These include AT, Angola Cables, Angola Comunicacoes e Sistemas, MSTelcom and Unitel, which is the mobile market leader.

Telephone directory company ELTA and postal operator ENCTA may also be privatized to some extent.

A 60 percent stake in Angola Cables is currently split between AT (51 percent) and MSTelcom (9 percent). Angola Comunicacoes e Sistemas is 100 percent owned by MSTelcom and Sonangol, which itself is tapped for privatization by 2022.

MSTelcom and Sonangol also each hold a 25 percent stake in Unitel, with the former’s slated for sale via public tender. The latter obtained its holding from Brazil’s Oi in January 2020.

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