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Kampala, Uganda| AFP | THE INDEPENDENT | The global Telecoms sector is booming despite the financial ruin of the COVID-19 pandemic to millions of individuals and businesses.
According to a study by International Finance Corporation, the COVID-19 pandemic has demonstrated the critical importance that telecommunications infrastructure plays in keeping businesses, governments, and societies connected and running.
The report says because of the economic and social disruption caused by the pandemic, people across the globe have tended to rely on technology for information, for social distancing, and working from home.
Many telecom players—from broadband to mobile to data center operators—have according to the study benefited from the surge in the traffic of data and voice. As a result, the telecom sector is performing well compared to other infrastructure sub-sectors.
In sharp contrast to many other industries, the telecommunication sector has been generally exempted from major COVID-19-related restrictions, such as stay-at-home orders and quarantine requirements, as it is recognized as an essential service.
Some telecom companies have been strengthened by the short-term spike in data traffic and increased use of broadband services, as more people are working from home and rely on video conferencing to hold meetings.
The growth in traffic demonstrated increased reliance on connectivity and digital services. As a result, the telecom sector has remained acyclical relative to the S&P 500 throughout the crisis.
S&P, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. The International Telecommunication Union (ITU) estimates show that there were over 4 billion internet users at the end of 2019, of which over 3 billion users are in developing countries.
However, in spite of progress in access to internet and mobile services, many people and businesses remain disconnected. Globally, 3 billion citizens remain unconnected. And in Africa, only 294 million have internet access out of a population exceeding 1 billion.
Communication service providers (CSPs) have reportedly shown a resilience and willingness to act, giving us a glimpse into the new market reality.
In this “new normal” era, Communication Services Providers are leading the effort for remote working, online learning and social distancing. Most of the Communication service users have resorted to applications like Zoom and others leading to an increased demand for internet data and voice services.
In Uganda, MTN’s chief executive officer, Wim Vanhelleputte was in June quoted saying his firm had registered between 30% and 40% surge in data traffic during the initial stages of the lockdown.
On 31 March, the Telecom industry association GSMA, which represents the interests of mobile network operators worldwide, called for a relaxation of spectrum licensing and management rules in view of the sudden and significant increase in traffic demand.
As countries increased lockdowns by mid-March, it was anticipated that the global telecom market would face sales challenges due to retail store closures and supply chain disruptions. In Uganda, the National COVID-19 task force classified telecom service providers as part of the essential service providers when a total lockdown was imposed.
City Lawyer, David Mpanga in an article in Bowman’s Law publication had predicted that increased home stays and remote conduct of business and transactions due to the COVID-19 pandemic meant that the country’s telecommunications sector would be burdened and strained.
At the times some telecoms like MTN and Airtel had slashed prices of internet data at certain times; fees on some mobile money transactions to allow for less contact with cash that may be infected with the virus.
After tough times, future would be bright In the long-term the outlook remains positive, as reliable connectivity becomes a critical commodity.
The director of Global Consumer’s firm Globaldata, Emma Mohr-McClune said more users are likely to take up Telecom services to communicate post COVID-19 “Coming out of COVID-19, millions of users worldwide will be more connected and more familiar with digital tools.
Telecom networks will have gained first-hand experience in dynamic network traffic management while businesses and their telco partners will have a better understanding of the challenges of homeworking.” Meanwhile, the International Finance Corporation envisages some challenge for the sector given the anticipated increase in traffic among others.
The International Finance Corporation (IFC) is in the process of accelerating investments in excess of $400 million to support our existing clients in the telecommunications sector.
The financing will according to IFC be utilized to address working capital requirements, refinance debt maturing in the short term and support network expansion through long grace periods and tenors.
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