Telcos face long road to recovery

Many telecos stockpiled cash as the recession hit

Telecommunication firms face a long road to recovery, with revenue growth rates expected to continue to decline for both mature and emerging market operators, analyst firm Ovum said today.

Its new report Telco Strategies for Recession and Recovery found that many firms showed resilience during the recession and managed to stave off pressure on their top lines by accelerating employee release programmes and stockpiling cash.

Ovum’s principal analyst and co-author of the report, Clare McCarthy, added that many firms had staggered investment programmes in infrastructures or new products, but said this would not have a negative impact on future innovations or their customers.

"Although investments may be put back a year, infrastructure overhauls and updates can take several years anyway, so the delay won't have a huge impact, overall," she said.

"Additionally, by upgrading existing systems, rather than developing new ones, companies have been able to make products more efficient and streamlined, both for themselves and their customers."

However, McCarthy added that firms would be affected by others issues that were also slowing the rate of recovery.

"Issues such as declining voice revenues and regulatory changes to services, such as data roaming charges, mean that, when coupled with the impacts of the recession, it could take telcos a while longer to return to pre-recession levels," she added.

The analyst added that the position of UK telcos in the market remained similar to that of other large firms on the Continent, and she said that the challenge now was to ensure they they had a well-communicated direction for the future.

"Companies require a clear strategy that can be communicated to all departments of the company that is measured against transparent metrics that show how the company is progressing across the board," she said.