June 03, 2022
Lower Handset Sales For The Remainder Of 2022 & 2023 Means Big Trouble For Telco
We are predicting a Q1 2023 recession as measured in Real GDP growth and the probability of stagflation (no growth with inflation) is quite high.
Has anyone not taken a look at the Real GDP Growth numbers they are incredibly low given all the nominal “growth” that has been touted!
We are predicting that the trends being reported in Singapore, China and the Philippines are going to continue for the rest of the year, and for all of 2023 due to the above. It will be for all countries.
What does this mean for a Telco?
When analyzing the P&L of a Telco you will see service revenue growth being 1.5% to 3% but hardware growth being 20%+
It appears that Telecom operator growth is being predominantly by hardware sales.
What happens to growth when this stops?
Why are we seeing across the board price increases at Telco?
For those that follow us we predicted these price increases due to the increased cost of transmission of 5G (it requires a lot more power at the tower).
Further to secure in-building coverage (other than 600 MHz) it’ is going to require good old fashioned concentrators and amplifiers… Dating myself but nothing new here and it is all physics (my thanks to my RF training at Motorola at the start of my career).
These concentrators and amplifiers are what we used to call FemToCell, MiFi, and now 5G FWA.
Another practical reality is the impact of 5G enabled devices and how 5G practically impacts the EBOM and SBOM in the devices.
Expect to see price increases across the board at all Telecom Operators at a rate of inflation that is 2x for Wireline related services, and 3x to 4x for Wireless.
Keep on eye on what happens to : Price Plans, Admin Fees, Customer Care/Service Charge fees, and who pays for the sales taxes!
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