[qi:gigaom_icon_voip] We have long talked about it, and now there are numbers to back it up: The global economic downturn has taken its toll on the telecom business. The entire telecom ecosystem — from broadband providers to equipment sellers — is in a world of a hurt. The fact that many large markets in the western world are reaching a saturation point is only exacerbating the problems for telecoms.
For the first quarter of 2009, the top 20 global service providers posted revenues of $251 billion, down 1 percent from the fourth quarter, reports Telegeography, a telecom research company.
For telecom equipment makers, things were worse: The top 10 equipment makers saw their sequential quarterly revenues decline 15 percent in the first quarter of 2009, to $59 billion. The terrible results of companies such as Alcatel-Lucent (s ALU), Nortel Networks and Nokia-Siemens (s nok) are a testament to the effect of the downturn. Even smaller players such as Ciena (s CIEN) have been hurting. No such problems for Chinese giant Huawei, however, which keeps growing and growing thanks to its low-cost offerings.
Broadband demand has remained steady: New additions during the first quarter of 2009 came in at 14 million, in line with the fourth quarter of 2008, with China accounting for 30 percent of global growth and the United States being the only country that added more than 1 million subscribers in the quarter.
Even the fast-growing wireless business slowed down: 153 million net new wireless subscribers were added during the quarter, about 10 million fewer than in the fourth quarter of 2008. India and China accounted for 49 percent of the growth in quarterly wireless subs. In other words, major western markets have been slumping pretty badly. “Countries like France, Germany, Italy, Poland, Ukraine and the UK were all essentially flat or even in slight decline,” Telegeography says.
In addition to the global slowdown, Telegeography is rightfully concerned about the impact of saturation in many major markets.
Historic growth in this market has been over 6% but TeleGeography forecasts that growth will decline to an average 3.5% over the next five years. Against this backdrop, the 3% year-on-year revenue growth for the Top 20 service providers can be seen as too sharp a fall, happening too soon. It should also be noted that the 3% growth is bolstered from mergers and acquisitions, and is not just organic growth.
In other words, things might actually be much worse than people think. Now we have seen some signs of a rebound in the second quarter of 2009, but it would be interesting to tally the numbers and see how exactly it’s evolving.
12 thoughts on “Downturn Slows Telecoms (Except in India & China)”
Time to get out of the Telecom business.
You could probably add the Middle East to the list of areas experiencing a decent level of growth. While they aren’t on the same level as the Bhartis and China Unicoms of this world, they are pushing aggressively into new markets in North/Central Africa & Central/West Asia, and that combined with the quick adoption of mobile broadband in home markets has resulted in a respectable increase in subscriber numbers and ARPU.
Comparing technology based companies in growth capitalist markets to government-owned entities in communist strongholds such as China doesn’t amount to the same result in an analysis. Using Chinas telephony and mass-communications networks is like trying to send a coded love letter with bank heist plans to a mob boss while on death row in prison. There is no freedom of communication and security for telephony users in China, and there is no restriction to what China does to its citizens use of its telephony.
China and India ultimately don’t make things. They make other peoples things. India wants to do it, but India wants to so much be the next China it’s disturbing. India should want to be the next Japan, but they’re not listening. China will not give them a good trip, and Russia is just as bad. Look at the communist investment in US-based on-line social networks from Russian government connected entrepreneurs. These aren’t really entrepreneurs. They’re Russian government enlisted, positioned and financed. So how would you define them? Agents? Plants? Information gatherers? Who knows?
India needs to stay the H*** away from all this S***, but unfortunately they are right in the middle of it.
couldn’t agree more. India must have its own vision, she can’t emulate China’s success. The thing with Chinese is they will do anything for money, they will work like a mule just for money. Indians on the other hand are culturally different from the Chinese, Indians are much more intellectual race, in the sense that they have a good command of language and maths, they ought to focus in these areas.
Its news papers companies that are saving the Telecom companies from being perceived old school.
If they had some good meetings probably they could be saved. Unfortunately they don’t know about the meeting nazi app
It appears the people who really NEED broadband service already have it, so there’s the saturation point = bad news for telecoms.