COVID-19 Will Trigger a 2.6 Percent Decline in Wireless Service Revenue

COVID-19 Will Trigger a 2.6 Percent Decline in Wireless Service Revenue

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The COVID-19 induced 2020 recession will see all regions suffer in terms of wireless service revenue declines in 2020, according to Strategy Analytics. For the next year, the analytics company expects only a soft recovery.

“After a turbulent 2020/21, wireless service revenue will begin to stabilize and recover from 2023 as 5G provides a stronger contribution to connectivity revenue. Nevertheless service provider revenues which peaked in 2017 will continue to decline over the next 5 years,” said Phil Kendall, Executive Director at Strategy Analytics and the report author.

The report noted significant levels of unemployment or furloughing is impacting disposable income of those impacted. The mobile phone remains a critical tool for most; however affordability is still impacting expenditure profiles. Roaming revenue, which typically accounts for 2-4% of service revenue for operators, has been hit significantly and in many regions will run at suppressed levels into 2021 as travel behavior struggles to return to 'normal'.

On the positive side, the analyst firm suggests that broadband connectivity has become a must-have during lockdowns and heavy home working/studying patterns. Many operators are experiencing significant increases in mobile voice and data traffic and the high levels of dependence on mobile phones has seen the wireless sector less impacted than some industries.

Strategy Analytics sees and an increasingly challenging environment for service providers over the next five years. “Slower overall cellular subscription growth, characterized by fastest growth in lower-ARPU regions and lower-ARPU categories such as connected devices, and sustained competitive intensity will make connectivity service revenue growth hard to find,” said David Kerr, SVP Wireless and Broadband at Strategy Analytics.

There were over 75 live commercial 5G networks globally by the start of May 2020. User-linked 5G connections will grow to over 200 million by year-end and 2.8 billion in 2025. Strategy Analytics estimates that 5G ARPU was 80% higher than 4G in Q1 2020.

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