HOW TELCOS ANSWERED THE CALL FROM BUSINESS

May 22, 2020

As the infrastructure providers responsible for keeping us online, telecoms companies have been at the heart of how people and businesses have responded to Covid-19. Up against unprecedented demand and high expectations, ‘telcos’ have proven resilient. But, by meeting surges in traffic, they have had to delay the rollout of new services, including 5G in Europe.

Telcos were prepared for the pandemic: their technological expertise, network capabilities and overall organisation has allowed them to respond adeptly to the challenges created by coronavirus.

The real question mark was not over how they would handle the rise in traffic, but how businesses would migrate their people to working remotely. The increased cyberattacks – namely phishing and email scams – seen at the beginning of the lockdown period validated that question, but telcos have largely gone out of their way to help organisations protect their IT infrastructure.

DEPENDING ON TELCOS

For many white collar workers, lockdown means a massive dependence on services offered by telcos: video calls, instant messaging and file sharing and storage. Meanwhile, outside of work, people are relying on e-commerce and app-based healthcare. What were important services have become essential ones: in turn making telcos more responsible than ever for shaping the smooth running of our daily lives. How telcos contribute to how we exit lockdown, and they maintain their services in the new working world pose big opportunities for their sustained growth.

5G DELAY IN EUROPE

However, telcos’ commitment to the impacts of Covid has also led them to be temporarily distracted from introducing new services. In Europe the rollout of 5G has been delayed – French authorities, for example, have delayed the 5G spectrum’s auction.

With the ending of strict lockdown measures in European countries, telcos will have to restart their 5G plans, including the physical installation of new infrastructure. Companies must therefore be able to restart the rollout but ensure they have the financial and operational capacity to do so.

That urgency is not simply about telcos getting back on track: 5G remains a game changer technology for businesses and if the network infrastructure is delayed then so too are new customer services.

NEW AND OLD WORKING TOGETHER

Against a backdrop of disruption, traditional players are likely to thrive. They know the network, which is the essential part of keeping any service – new and old – available. Challengers, nevertheless, may get their opportunity later – possibly by creating 5G native services that we don’t even imagine today.

To do that, challengers may have to work alongside traditional players to create an ecosystem of mutual assistance and trade-offs, in a bid to secure innovation and customers over the long-term.

REPUTATIONAL GAINS

Covid-19 has positively shifted people’s mindset on the role and resilience of telcos. In part that’s down to the sheer number of people logging into online services: Spotify gained six million subscribers in the first quarter of 2020, virtual meetings platform Zoom grew from 10 million daily meeting participants in December to more than 200 million in March, while Disney+ attracted 54 million subscribers just days after launching. While record-breaking numbers won’t change the telco business model, they will inform the new services that telcos and others develop.

Telcos have, rightly, enjoyed a reputational boost in recent months as they have expertly navigated huge customer and infrastructure demands. When it is time to refocus on 5G rollout and other innovation projects, telcos will serve themselves well by remembering what worked during a high-pressure period and applying these lessons to future scenarios.

CONTACT US

ROY ANDERSON | PHONE: 212.375.6565 | EMAIL: ROY.ANDERSON@MAZARSUSA.COM

JONATHAN SOMER | PHONE: 646.435.1572 | EMAIL: JONATHAN.SOMER@MAZARSUSA.COM

 



Disclaimer of Liability

The information provided here is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

Mazars USA LLP is an independent member firm of Mazars Group.


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