• IDC warns looming economic slowdown would impact growth
Worldwide spending on telecoms services and Pay TV services reached $1.56 trillion in 2021, an increase of 1.6 per cent year-on-year, according to the International Data Corporation (IDC).
Out of the $1.566 trillion, markets in Nigeria, cum Africa, Europe and the Middle East (EMEA) earned $479 billion in revenue, an increase of 1.1 per cent from the $474 billion realised in 2020.
IDC expects worldwide spending on telecoms and pay-TV services to increase by 1.4 per cent in 2022 and reach a total of $1.58 trillion.
According to IDC, 2021 was characterised by the quick recovery of the global economy from the slump caused by the COVID-19 pandemic. It pointed out that this favourable environment resulted in additional spending growth on telecommunications services, which made the total value of the worldwide market rise slightly faster than originally forecast.
It pointed out that this trend was common for all global regions as the EMEA market grew 0.2 percentage points faster than forecast in October 2021; Asia/Pacific grew 0.5 percentage points faster, and the Americas grew 1.0 percentage points faster.
IDC said the higher-than-expected growth was also recorded in all technology segments except for Pay TV, which is logical because people were able to spend more time outside of their homes and therefore some decided to cancel subscriptions to TV packages acquired during the lockdowns.
IDC’s October 2021 forecast for the worldwide Telecom Services and Pay TV market included a scenario of further recovery (i.e., even higher growth rates) in the years 2022 and 2023. However, because of new circumstances that include accelerated inflation and the raising of benchmark interest rates by the central banks that will consequently lead to slower economic growth in the years to come, the forecast has been changed.
The new forecast is still optimistic, but the growth rates in its first half will be lower than what was recorded last year. The body noted that inflation should nominally have a positive impact on this market: the operators will be increasing their tariffs, clients will be paying more, and the total value of the market should be growing faster than previously expected. However, IDC said inflation also generates a deterioration of consumers’ and businesses’ purchasing power, thus causing a decrease in demand.
According to it, it is to be noted that the impact of inflation in the telco services market will be stretched over the next several years. “This is because a high proportion of users have two-year contracts with operators that guarantee stable fees until their contracts expire. That also means that the effects of inflation will initially be higher in the markets with a higher proportion of prepaid customers.
“War in Ukraine will have a negative effect on the market for communications services in EMEA. It will primarily hit the Ukrainian market, which will see a considerable decline due to destroyed network infrastructure and a huge number of people leaving the country. The Russian market will also decline as local demand will be under pressure due to the recession caused by international sanctions. On the other hand, the war will positively impact the markets of neighbouring countries (Poland, Slovakia, and Romania) that are hosting large numbers of Ukrainian refugees,” IDC stated.
It stressed that in addition, the COVID-19 saga has not ended yet, adding that the current lockdowns in China and the possible emergence of new variants of the virus in the rest of the world might bring additional impacts to the market, primarily in the business fixed data services section.
“Although the previous waves of COVID did not drastically affect the global market for telecoms services, the related global supply-chain disruptions are already causing shortages of end-user and network equipment and thus create new concerns for supply-side participants. This all contributes to IDC’s conservative forecast,” it stated.