Revenue from 'telecom' operators falls 5.4% in second quarter

Business

By CAPosts 03 August, 2020 - 05:00am 163 views

© iStockphoto Analysts forecast video streaming services to grow by 32% at year-end.

Although the telecommunications industry has been the least affected by the coronavirus pandemic (COVID-19), the second quarter of the year showed a 5.4% revenue slowdown, compared to 5.5% growth in the same period last year.

Ricardo Zermeño, managing director of the consultans Select, explained that the turnover of the operators in the sector between April and June 2020 was 121,632 million pesos. The previous year they achieved a cumulative of 128,605 million pesos. "Mobile operators are the most affected and fixed second," said Erick de la Cruz, Select's manager. The former experienced a 13.9% drop due to the decline in cell equipment revenue, which was affected by the closure of customer service centers – where the largest number of business transactions are generated – as they were not considered essential during the contingency. "Prepaid revenue also suffered impact, as there was lower consumption of mobile communications from confinement (...) 70% of mobile operators' revenue comes from this scheme. Postpaid, the reduction came from user migration to cheaper plans," the analyst added. Fixed services, which fell 2.2%, suffered impacts by the reduction of business services, as well as the term of recurring contracts by the companies.

On the other side of the coin are restricted television operators, virtual mobiles and network wholesalers, which had increases during the second quarter of the year. The latter was the winner, with a revenue increase of 130%. In terms of television, the positive performance was due to the demand for the consumption of premium content and packages with more channels and payment systems, as well as an increase in internet users due to the need for connectivity. "Virtual mobile operators go very close with network wholesalers. These are beginning to gain relevance for companies like Walmart that, for example, their business turn is not in the ventement of telecommunications services, but in the customer loyalty strategy", detailed De la Cruz. The analyst said more competition is expected in the virtual mobile operators business, so companies are better off offering in the market. Just as Izzi Mobile did with its quad play services supported by the shared network Altán Redes. By the end of 2020, Select analysts augur a positive outlook. While expecting a slowdown in the sector in the third quarter of the year, from October to December there will be growth in streaming businesses (32%) restricted television (9%).

"With regard to pure telecommunications, in a likely scenario in which the epidemiological traffic light evolves as expected and there is slow but advancing economic growth, we see a slightly negative impact of 0.01%," said Erick de la Cruz. Mobile and fixed voice services will be the most impacted, with a drop of 8% and 2%, respectively, due to the reduction in prepaid revenue. "These expectations could be positively impacted as the Internet for All project progresses, with which the federal government seeks to connect the entire country. As well as the theme of the Free Trade Agreement with the United States and Canada, which should be beneficial for the three countries in the area of telecommunications. With this, the impact on operators would be very light towards the end of the year," the analyst concluded.

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