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Sunday, 07 March 2021

Telecom business sees boom in emerging markets, but challenges still ahead: IFC

Many telecom players have benefited from the surge in data and voice traffic due to the COVID-19 social distancing and work from home measures

Doaa A.Moneim , Saturday 30 May 2020
In this May 15, 2020 image, Blake Ross, founder of Kindness of Strangers, right, works on her laptop
In this May 15, 2020 image, Blake Ross, founder of Kindness of Strangers, right, works on her laptop as her daughter, Tess, 2, works on her toy laptop in New York. Ross has partnered with Enlivant, which runs senior homes in 20 states, and has set up an Adopt a Grandparent program.(AP)
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As data traffic and broadband services have shifted from the office to the home, the telecommunication business is witnessing a boom, especially as the global telecom sector is already playing a key role in keeping people, governments, and businesses connected, according to the latest analysis published by the International Finance Corporation (IFC).

According to the IFC’s analysis, many telecom players have benefited from the surge in data and voice traffic due to the COVID-19 social distancing and work from home measures, and so the sector is performing well compared to other infrastructure sub-sectors.

The short-term supply disruptions are also projected to recede in the second half of 2020, thus the risk of future delays in shipments of network equipment is small.

Moreover, companies’ service levels are not witnessing significant disruptions, with levels exceeding 99.95 percent, as most clients have effective business continuity plans, effective operational procedures, and supply agreements for essential processes.

However, the sector is likely to witness a decline in its revenues and business in 2020 affected by the negative global economic growth outlook, according to the IFC.

According to the IFC, which interviewed 20 telecom companies, the sector’s growth and business development are uncertain in the foreseeable future, as the lockdown measures have affected the movement of salespeople and distributors, significantly raising the difficulties for new business development, as the analysis showed.

Additionally, companies’ revenues are likely to decline on the back of the reduced economic activity in the short run, according the IFC analysis.

The uncertain outlook of the stock and bond markets is also playing a role in this regard.

The IFC has allocated a total of $400 million to support its existing clients in the sector to address the crisis, which will be utilised to deal with working capital requirements and debt refinance.

The sum is out of the $8 billion fast-track financing that the IFC has appropriated in response to the COVID-19 crisis.

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