Home5G & BeyondCoronavirus could cost global mobile industry $51 billion

    Coronavirus could cost global mobile industry $51 billion


    Omdia predicts that mobile revenue will drop 4.1% worldwide with Europe suffering most with mobile services revenue falling by 9.1%. Not everyone is convinced.

    Mobile revenues in 2020 market are now expected to be about $51 billion short of the research house’s previous forecast.

    Omdia now predicts worldwide mobile communications services market revenue will total $749.7 billion this year, down from the prior forecast of $800.3 billion. This compares to $781.5 billion in 2019.

    It expects global annual revenue to fall by 4.1% this year, amounting to $31.8 billion.

    Spikes not revenue

    “Mobile phone companies around the world are experiencing usage spikes as more countries encourage or enforce social distancing and work-from-home rules to slow the spread of the COVID-19,” said Mike Roberts, Research Director at Omdia. It cites Vodafone UK, for example, whose mobile Internet traffic has increased by 30% and mobile voice traffic by 42% due to the pandemic.

    The study predicts that Europe will suffer the largest impact of the crisis, with mobile service revenue falling 9.1% to $131 billion – representing a downgrade of 9.3% compared to Omdia’s previous forecast – due to reductions in prepaid revenue and a dramatic drop in inbound roaming revenue.

    Roberts elaborates, “The spikes aren’t enough to overcome the impact of the pandemic on consumer behaviour. These rules are having a dramatic impact on various regions of the world, halting new subscriptions and upgrades in the United States, while slashing revenue for operators in Europe.”

    Omdia expects consumers’ uptake of 5G will be 22.1% slower than previously forecasted, due to financial concerns as well as the possibility of delays in 5G network deployment and in the availability of 5G devices.

    Maybe not?

    Not everyone is convinced. When it released its Q1 figures this week, Orange, said in a statement that it is too early to see whether coronavirus will affect its 2020 guidance: “Based on currently available information, Orange does not expect a significant deviation from its financial objectives for the fiscal year 2020 but will closely monitor developments.

    “The Group will therefore consider an update of its 2020 financial objectives at the publication of its second quarter results when it has the benefit of greater visibility on the impact of the crisis linked to COVID-19.”

    Drop in churn and CapEx

    Also, a study by Jefferies Equity Research published earlier this month suggested reduced churn – which can run at 15 to 20% of sales – will help ease pressure on the top line as it equates to potential savings of 10 percentage points.

    In combination with operators’ reduced CapEx during the pandemic, Jefferies thinks this could ensure operators’ free cash flow could remain in line with predictions it made before the pandemic.

    Omdia acknowledged the high level of economic and commercial uncertainty created by the COVID-19 pandemic and will produce a revision of its global mobile forecasts next quarter.