Telecoms should benefit from the downturn

Sharifah Amirah/Frost & Sullivan
02 Dec 2008

In the current financial crisis, the telecoms industry is one of the few that has a strong leg to stand on and is likely to gain from the downturn in the economy.

Enterprises will be looking to minimise risk and improve operational efficiency. The focus on core competencies and reducing operational costs will open doors for IT and telecoms service providers.

Rising unemployment rates and falling GDP growth are forcing end-users to spend less on entertainment and digital communication. In the light of reduced consumer spending, pricing is a short term priority for service providers.

In the mid-term, value added services and innovative distribution models will be key to growth and while the primary aim will be to survive the next couple of years, sights on further horizons should still be trained on the far horizon as in the longer term three key themes will prevail - mobility, content and bandwidth.

The industry will move towards divestment, consolidation, collaboration and greater investments in research & development. Service providers with strong foundations will survive the storm and transform into more streamlined entities. Sharing business risk and securing more immediate returns on investments will offer a basis for both vendors and service providers to monetise on new opportunities.

In terms of the public sector, the UK government amongst several others has channelled resources towards digital infrastructure as a reboot mechanism for the economy. This will provide a stimulus for the ICT industry and potentially improve digital public services, such as e-health and e-procurement.

Overall, the outlook is far from gloomy.

Sharifah Amirah, principal analyst, Frost & Sullivan

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