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APAC spending on telecom services grew by $11 billion - IDC

The International Data Corporation (IDC) says spending on telecommunications services and pay-TV services in APAC jumped from $494 billion in 2020 to $505 billion last year.

There was also an increase in global spending, reaching $1,566 billion in 2021, increasing 1.6% year over year.

The IDC says 2021 was characterised by the quick recovery of the global economy from the slump caused by COVID-19.

As a result, the IDC says there was additional spending growth on telecommunications services, increasing the total value of the worldwide market slightly faster than initially forecast.

This trend was common for all global regions:

  • The Europe, Middle East, and Africa (EMEA) market grew 0.2 percentage points faster than forecast in October 2021.
  • Asia/Pacific grew 0.5 percentage points faster.
  • The Americas grew 1.0 percentage points faster. 

The IDC also recorded the higher-than-expected growth in all technology segments except for pay-TV. The organisation puts that down to the fact that people could spend more time outside of their homes, and therefore, some decided to cancel subscriptions to TV packages acquired during the lockdowns.

While the IDC forecasts that 2022 and 2023 will continue to see growth in spending, it expects the rates in its first half will be lower than what was recorded last year.

It says accelerated inflation and the raising of benchmark interest rates by the central banks will consequently lead to slower economic growth in the years to come.

IDC worldwide telecom services research director Kresimir Alic says the economic recovery in 2021 resulted in higher-than-expected growth rates, but the same forces that pulled the market up can also push it down.

"Much like other markets, this market is not immune to changes in economic trends and forces such as inflation and recession might quickly change the shape of the curve," he says.

"Inflation is already happening, and economies have started to slow down – for that reason our view of the market remains cautiously optimistic."

The IDC says inflation should nominally have a positive impact on this market. For example, operators increase their tariffs, clients pay more, and the market's total value grows faster than previously expected.

However, inflation also generates a deterioration of consumers' and businesses' purchasing power, thus causing a decrease in demand. The IDC says the impact of inflation in the telco services market will be stretched over the next several years.

This is because a high proportion of users have two-year contracts with operators that guarantee stable fees until their contracts expire. That also means that the effects of inflation will initially be higher in the markets with a higher proportion of prepaid customers.

The IDC says the war in Ukraine will have a negative effect on the market for communications services in EMEA. It will primarily hit the Ukrainian market, which will see a considerable decline due to destroyed network infrastructure and a huge number of people leaving the country.

It says 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 positively impact the markets of neighbouring countries (Poland, Slovakia, and Romania) that are hosting large numbers of Ukrainian refugees.

In addition, the IDC says the COVID-19 saga has not ended yet. The current lockdowns in China and possible emergence of new variants of the virus in the rest of the world might bring additional impacts to the market, primarily in the business fixed data services section.

It says previous waves of COVID-19 did not drastically affect the global market for telecom services, but the related global supply-chain disruptions are already causing shortages of end-user and network equipment and thus creating new concerns for supply-side participants.

The IDC expects worldwide spending on telecom and pay TV services to increase by 1.4% in 2022 and reach a total of $1,588 billion.

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