coronavirus
Brendan Ritchie
Brendan Ritchie
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COVID-19 impact on the Telco Sector

How will COVID-19 impact the telco sector? 

Every business is feeling some level of strain under the impact of COVID-19, and telcos aren’t any different. 

So how are telcos being affected? And what will determine how each one fares through this period? 

Customer base 

Businesses will continue to need internet and voice services while functioning, but many sectors are seeing businesses close their doors, either temporarily or permanently, and these numbers will increase. 

Retail, hospitality, and tourism are hurting badly on both sides of the Tasman. If any telco has a disproportionately high number of clients within these verticals, they will see a lot of requests for assistance, churns, and defaults.  

Customer size 

The scale of a business doesn’t protect it from being impacted by the current pandemic response, just ask Flight Centre. But generally speaking, enterprise and large corporate clients can weather the storm better than an SME. ISPs with predominantly small to medium business as clients risk being more severely impacted. 

Smaller ISPs tend not to be awarded Government-backed projects, nor do they attract large customers with complex needs.  

Let’s say I have this wrong, and a small ISP does have a couple of key accounts with large spends, as a proportion of total revenue, this puts the small ISP’s success/failure in the hands of these accounts. 

Product set 

If an ISP hasn’t updated its calling solutions in the last few years, it isn’t well set to offer its customers what they now need, that being integrated mobile solutions like Teams Calling or 3CX. 

If your offering doesn’t include features such as chat, web conferencing, softphones, mobile apps and presence, you can’t win. 

Ability to be flexible 

In the last two weeks, Lightwire Business has taken Enterprise accounts on both sides of the Tasman from the likes of Optus, Vocus, and Vodafone. Why? Simply because those ISPs all told their existing clients that capacity increases to existing services would take 2-3 months to process.  

In one particular case, we had the same job done in 4 days. These are businesses with 4000-7000 employees, yet the big telcos couldn’t find the motivation to move fast enough to provide what was required. 

Whether the big telcos have been impacted in their ability to service clients due to lockdowns in places like Manila, I am not sure, but there is no doubt that their inability to meet customer requirements in a rapidly changing environment is hurting them and benefitting the likes of Lightwire. 

ISP size 

Regardless of whether or not the big telcos lose some large clients, they will come out of the other side of this in reasonable shape, albeit with a smaller staff count.  

Deep pockets help, it’s obvious I know, but the reality is that a number of small ISPs are going to struggle. The smaller the asset base to borrow against, and the lower the operating margins, the less likely an ISP is to remain solvent. 

The smaller the operation, the harder it is to cut costs, they will already be running very lean. A number of ISPs with revenue below $10million are going to struggle to see this period through. 

How about Lightwire? 

Due to great work by the senior leadership team over the last few years, we have grown to have a strong balance sheet, positive cashflow and revenue approaching $20million on a run-rate basis. We are continuing to grow during this period, albeit at a slower rate than we were. 

Striking a balance between our commitments to our clients and our staff, we are assisting customers in hard-hit sectors while taking a low-risk approach to day to day decision making. We feel we are closer to the start line than the finish line but have adjusted quickly and well placed to kick on from here. 

Lightwire has always set up its team members with home offices as standard, so the move to working remotely has not set us back at all. We have a great team that is banding together to keep smashing out results for new and existing clients. 

A note to finish 

To the people in the industry that have lost their job or feel that may be on the cards, hang in there. On the other side of this, and there will be better times, companies like Lightwire will always need good people. 

Brendan Ritchie 

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