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Telecoms affected by crisis

Week 42, 2008

Interestingly telecom operators have chosen various communication modes around the crisis. For instance, both British Telecom (BT) and Deutsche Telekom (DT) sent reassuring messages to the financial analysts, expecting to calm down their share holders. BT CEO Ian Livingston said the company is preparing for difficult times ahead but has not seen a big impact from the worsening economic climate so far. "Have we seen a big effect? Not yet!", he said. Deutsche Telekom reaffirmed the company had no need to correct its forecast because of the current global economic crisis. DT CEO Rene Obermann said "Deutsche Telekom will stick to its 2008 targets and it is solidly financed".

At the other end of the spectrum, and in a different region, Singapore Telecom admitted its domestic operations are beginning to see the effects of the current turmoil. The company’s Singapore chief Allen Lew admitted that SingTel is preparing for a further 12-18 months of "uncertainty and a difficult economic environment." Also in Indonesia, (the sixth-largest country in the world in terms of mobile connections), operators have seen their ARPU (Average Revenue Per Unit) shrink by 25% in Q2/2008.

Analysts such as Ovum anticipate the fear of crisis may lead both corporate customers and households to reduce spending more than they need to. This would trigger further reductions in the whole telecom value chain. Cutbacks occurring at the end-customer level will be amplified at the infrastructure and component levels. Of course, when customers decide to reduce their spending, they may postpone taking new subscriptions, or changing to a new handset, reducing directly SIM needs for mobile network operators.

Thierry Spanjaard
Chief Editor
Smart Insights