MoffettNathanson: COVID-19 Impact on Telecom Business Revenues Not So Bad, But Worst is Yet to Come

The COVID-19 impact on telecommunication business revenues hasn’t been as bad as financial analysts at MoffettNathanson expected it to be. But the worst is yet to come. While US gross domestic product dropped at a 32.9% annualized run rate between the first and second quarters of 2020, US telecom wireline business revenues dropped at only a 0.4% annualized rate during the same timeframe. “[S]ociety has relied heavily on telecom services to remain economically productive, educated and entertained, helping to insulate service providers’ results from the broader turmoil,” the researchers observe. The researchers argue, however, that “we don’t think results in the first half of 2020 are illustrative of the full impact of the COVID crisis.” They note, for example, that telecom providers saw a spike in voice revenues and collaboration revenues as employees worked from home. Collaboration offerings may remain more popular than they were before COVID-19 but usage will decline from Q2 levels as employees return to offices, the researchers predict. For 2020 overall, the MoffettNathanson researchers expect to see telecom wireline business revenues decline by less than the 5% to 7% that the researchers initially forecast.