Global telecom services market saw higher-than-expected growth in 2021, but the future is clouded by the impending economic downturn, according to IDC

NEEDHAM, Mass.–(BUSINESS WIRE)–Global spending on telecommunications and pay-TV services reached $1.566 billion in 2021, a 1.6% year-over-year increase, according to the International Data Corporation (IDC) Semi-Annual Global Telecommunications Services Monitor. IDC predicts that global spending on telecommunications and pay-TV services will increase by 1.4% in 2022 and reach a total of $1.588 billion.

The year 2021 has been characterized by the rapid recovery of the global economy from the slump caused by the COVID-19 pandemic. This favorable environment has led to further growth in spending on telecommunications services, so that the total value of the global market has increased slightly faster than initially expected. This trend was common to all regions of the world: the Europe, Middle East and Africa (EMEA) market grew 0.2 percentage points faster than expected in October 2021; The Asia/Pacific region grew 0.5 percentage points faster; and the Americas grew 1.0 percentage points faster. The higher than expected growth was also recorded in all tech segments except Pay TV, which makes sense as people have been able to spend more time away from home and so some have decided to cancel the subscriptions to TV packages acquired during confinement.

Global Regional Services Revenue and Year-Over-Year Growth (revenues in billions of dollars)

Global Region

2020

Revenue

2021

Revenue

2021/2020

Growth

Americas

$574

$582

1.5%

Asia Pacific

$494

$505

2.1%

EMEA

$474

$479

1.1%

Total

$1,541

$1,566

1.6%

Source: IDC Worldwide Semiannual Telecom Services Tracker, 2H 2021, May 6, 2022

IDC’s October 2021 forecast for the global telecommunications services and pay-TV market included an additional recovery scenario (i.e. even higher growth rates) in 2022 and 2023. However , due to new circumstances which include accelerating inflation and the raising of benchmark interest rates by central banks which will consequently lead to slower economic growth in the coming years, the forecast has been modified. The new forecast is still optimistic, but growth rates in the first half will be lower than those recorded last year.

Inflation should theoretically have a positive impact on this market: operators will increase their tariffs, customers will pay more and the total value of the market should grow faster than expected. However, inflation also causes a deterioration in the purchasing power of consumers and businesses, thus leading to a drop in demand. It should be noted that the impact of inflation on the market for telecommunications services will be stretched over the next few years. Indeed, a high proportion of users have two-year contracts with operators who guarantee stable prices until the expiry of their contracts. This also means that the effects of inflation will initially be greater in markets with a higher proportion of prepaid customers.

The war in Ukraine will have a negative effect on the communication services market in the EMEA region. It will mainly affect the Ukrainian market, which will experience a considerable decline due to the destroyed network infrastructure and a large number of people leaving the country. The Russian market will also decline as local demand will be under pressure due to the recession caused by international sanctions. On the other hand, the war will have a positive impact on the markets of neighboring countries (Poland, Slovakia and Romania) which host a large number of Ukrainian refugees.

Also, the COVID-19 saga is not over yet. The current lockdowns in China and a possible emergence of new variants of the virus in the rest of the world could have additional impacts on the market, mainly in the business fixed data services section. Although previous waves of COVID have not drastically affected the global telecommunications services market, the ensuing global supply chain disruptions are already causing equipment shortages for end users and networks and thus creating new concerns for supply-side actors. All of this contributes to IDC’s cautious forecast.

A chart illustrating IDC’s 2021-2026 forecast for telecommunications services by region is available by viewing this press release on IDC.com.

The telecommunications services industry has remained very stable throughout the COVID-19 pandemic. More than that, it acted as the backbone of the global economy, allowing people to communicate, be entertained, and get their jobs done while confined to their homes. “The economic recovery in 2021 has boosted market growth and resulted in higher than expected growth rates, but the same forces that drove the market higher may also drive it lower,” said Kresimir Alic, Research Director, Worldwide Telecom Services at IDC. “Like other markets, this market is not immune to changes in economic trends and forces such as inflation and recession could quickly alter the shape of the curve. Inflation is already in prices and economies have begun to slow – for this reason our view of the market remains cautiously optimistic.”

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About IDC

International Data Corporation (IDC) is the world’s leading provider of business information, consulting services and events for the information technology, telecommunications and consumer technology markets. With more than 1,200 analysts worldwide, IDC offers global, regional, and local expertise on IT technology, benchmarking, and procurement, as well as industry opportunities and trends in more than 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community make fact-based technology decisions and achieve their key business goals. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the global leader in technology media, data and marketing services. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC-Blog for industry news and insights.

Sean B. Jackson