Is Telecom Industry In Recession ?

That's the only thing which comes to my mind when I support "No, Telecom is not hit by recession". Communication is a necessity today than a luxury, and consumer would allocate a budget (generally unplanned) for communication services which makes the industry survive like any FMCG, unlike IT.

However, to say a plain NO is being complacent and first step towards driving oneself into recession.

> Consolidation happening in the industry is an indication of the fear of recession which eventually can creep down to telecom, and Telecom industry can do lesser to avoid this perculation.

> Reduced Spending, which is already evident in cautious expansion investments, delayed projects, lack of enthusiasm for 3G, Job cuts, Hiring Freezes and numerous other day to day evidences. Undoubtedly margins have reduced to an extent to question survival of several Telecom vendors while Operators strive to break even their costs.

> Especially in India, Telecom Density - No. of subscribers are still increasing. However, at the same time ARPU is reducing. This will have a balancing effect on Total Revenues while competition is set to get fierce with MNP on verge of launch, new operators finally forced to invest in networks, and existing operators having to expand their networks in rural geographic zones which were totally ignored until now. The Pay back period for any investments hereon will be longer and harder to predict. This calls for caution.

> Finally, many operators are banking on VAS, Content Based Services and DATA to increase ARPU and total revenues. This can surely be one way, but is this though process impacted by overall economic recession? Absolutely Yes, these services are still luxuries. Its only Convenience of Mobility over voice and sms which has become a necessity now, and thats limited to a certain extent for reasons expressed above.

Cheers

The subscriptions are ever increasing in telecom. When RELIANCE & TATA got into the already crowded GSM market the subscription base grew. There is still lot of rural market to be tapped. some companies had also trimmed their workforce but that was due to restructuring of the organisation & not due to fall in sales or recession

Still there are so many areas which are not covered, in my mind lot of scop is there but for new player job will be little dificult.

If there is no communication between one another ...then only telecom becomes recession...but now a days telecom companys trend as change to out sourcing .....no in the company payroll...except higher officials for two or three members per state....

i agree as the frequency of recuirment for telecom company is 20% increased as as compared to software company for yr 2008.....also as it is a service company which is directly proportional to customer needs and the way telecom is booming in india clearly gives the picture as no recession in telecom industry....but the thing is company is using this fear time and hiring the people in low packages..

you bet..certainly not in india ....just look at the subscriber add per month....new companies/licences....profit and revenue increase of equipment / service providers......

No matter the whole world comes under recession, still people need to talk with each other. So, I don't think Telecom industry can come under recession.

Its in the full virtue of its ruling towards ruling the world cant be de-morlised.

In particular, the Indian telecom industry is not at all in recession, infact is doing good business compared to the other sectors.

The currnet Indian telecom sector is not just raising towers in every vacant land / building and giving away handsets for 10s and 100s of rupees. It is now a global service, drawing the attention of the international service providers and managing their services off-shore. The services are rendered to the corporate and retail customers. Though the world economic situation has hit the companies of varied sectors, the telecom sector has seen little or nil fluctuation.

That too, when you think of the media broadcast service and the retail end individual customer service, it is never gonna let the service provider fall to the ditch.  In the present situation, if you study any country's telecom business you may watch a service provider loose business and other one grow - a tough competition, but  on the whole the average business done in the market segment would be welcoming. 

There are mixed elements and your premise seems to be debatable in absence of objective data. The tariffs are being reduced in the rural sector to accelerate penetration and provide first-mover advantage. Moreover there are regulartory perspectives where the oeprators are required to offer lower/special rates to the rural consumers. Could you please substantiate your ARPU claims?

We have a huge potential in the market, evevn we are going to have Number portability now onwards..

I agree with Mr.Swain.Telecom service has become an essential part of our life,it is not the luxury that we will not afford or we can't afford during recession.Anyways the affordability that the telecom companies provides doesn't make us think that we should suspend this service and because of which they continue to get customers even during recession.So telecom industry definitely is the least affected industry.

Raghunath ji i definitely in sync with you.Surely telecom industry is recession proof and it can't be affected even if there is a slowdown in other industries because first of all people did not have to spend much in taking service from this industry as telecom companies are regularly introducing low tariffs schemes and secondly everyone needs to do their business for which they can't help but to make calls as this is the cheapest way to connect with another without being in person.

So in my view telecom industry is somewhat isolated from the economic situation.

Mr.Manish i would say that inspite of telecom operators lowering down tariffs every couple of months still the telecom industry is doing good business as compared to any other industry.Infact subscribers are constantly growing and it doesn't look like the recession will effect this industry too much.

Effect of recession on telecom Industry.

Fast growth in Telecom and increase in business volume happened due to cost to the user going down both in terms of handsets, rentals, and  call charges. The Mobile business had already peaked in the cities. More growth at a faster pace is possible if the telecom penetration in Rural area improves. Unfortunately, rural telecom expansion has not grown in the way it should have been. .

Wired and wireless phones are now an essential part of rich and poor and therefore, is always a growing business provided the stake holders  in the business and authorities do not kill it.   To give impetus to rural telecom, it is necessary to implement systems and networks sharing to reduce investment cost and thereby reduction of cost to users. 

There are other reasons also in the slow down of telecom industry.

1. Reduced spending with so-called recession due to correction of the misappropriations of global economy by the greedy industrialists happening across the globe. 

2. Internet over phone lines has large business potential if the pone companies bring down the rental charged fro Internet access over phone lines. As the subscribers are already paying for their cphone connectivity, being shared on the same line,  the internet charge should be much less than the telephone rental. This will boost the internet related business volume.

3. As saturation is seen in the basic products, service providers are aiming for megabit data speed products which will negatively affect business volume due to high CAPEX/OPEX and high cost to users. 

4. Service providers and vendors are trying hard to sell mega bit rate products and mobile terminals which are neither marketable nor needed by the user in the mobile scenario. User's data needs could be satisfactorily met with an assured  data speed of 384 kbps in the down link. This would be enough for streaming of  Video + Audio in real time basis.  Even the 3G hot spots being set up are going to be expensive and hence cannot bring in enough business volume. These facts are taking the mobile business back to 2000 - 2002 era. 

Realization of the fact is likely to bring some reduction in staff working on the so called advanced technology projects. It is easy companies to camouflage these using Recession as a scapegoat.  

I do not see why the telecom industry would go into recession. All new developments towards science, technology, multimedia, communications, etc are using telecoms & IT as the main backbone... just see how mobile technology is booming....

More and more developments in bandwidth, and more and more savvy users will keep up the industry.

The very fact that new players are entering the already crowded playing fields of telecom is ample evidence that the telecom sector is not in recession.

Telecom, these days, has become a necessity and hence it would be one of the few sectors that would get affected in a very small measure or much later in the life cycle of a recession. 

Though growths of individual players would be affected to a large extent due to the number of competitors vying for a slice of the pie, the sector as such is not going through a recession or even a slow-down. 

With penetration@35% levels theres  huge scope .. hence its not in recession.

Any ways Indian industry is not facing recession - its facing econimic downturn... & telecom is far awaay from both as it i considered as necessity than luxury....

India still with the lowest penetration of communication modes....got a long way forward...but surely it will impact the revenues but will add to acquisitions...

Refer to the user addition / overall subscriber base in India....its really accelerating. Once the subscriber is created, he may at the max change his vendor. So the overall subscriber base is effectively higher. Secondly, once the subscriber is created, there is normally no CAPEX cost in this industry (taken care by initial infrastructure), the only one is O&M. Futher if CAPEX requirements are there, these days they are catered through Optimization of existing resources,thus creating good profit potential overall.

So only effect that will be there will be on margins only, a win-win situation for industry / subscribers. So till the subscriber base is growing, all in the industry look safe other than some hiccups / cleaning some look like 'extra' resources in the companies.

Travelling alone is not the factor there are people still at a segment whose income is not effected much by recesion a persons spending capacity towards his telecom usage would remain the same because its his need at the end of the day.

no its not in recession , as in present also in telecommunication coverage and capacity are not upto limit and each operators are tries their best for this and so for this they are hireing the employee everyday. 

I always felt telcom has the one of upper standard field where recission can't take place,it's always been the place of oppurtinuity,it's only about the calls but the amount of internet and GPRS used in daily life without which people cant offord to survive.Due to globlisation people are being more aware in what they need ,I strongly intimate recission cant or never takes place in telecom

        thanks &regard

          Raghunath.j

         Project engg  (TAPL)

Telecom is no more a luxury service but an essential service for all today. During recession people tend to give up on luxury services to be able to afford the essential service. When more people loose jobs, they don't get to use internet at office and will require to remain connected from home.. They need to search for jobs, apply for jobs, take online courses to develop skills/reskill and be in touch with others to network so that they get employed again soon. Even if Operators are forced to cut price of the services, in most cases they will be able to be compensated by government's stimulous package in terms of reduction of license fee, bandwidth price, customs duty cut on equipments etc.. And it is an opportunity for them to launch innovative service to have more potential customers at a lower price point. Also operators would bargain better prices and payment terms with the vendors. As funding from banks for new capex becomes difficult, telecom operators will look at exchanging their idle assets. So at most there can only be a slow down specifically for telecom services industry but no recession. And during this period telecom operators would have cut their cost significantly so that when the world recovers from recession they would be in great position to make the most of it.

Hi Philip,

            I agree with you.Jobs are a real problem now adays in any sector,even Telecom is not spared.Employees are laid off, offices are getting closed down at some places.Nortel has become bankrupt.Investors are scared to put their money into any new business oppurtunity or any loss making company.

           But there is an other side of this.Telecom companies,specially Telcos are putting more focus on the places in this globe where MobileCommunication or even wireline has still not reached.For Urban population Telecom companies are coming up with 3G,WiMax,VoIP etc. Due to recession many companies are cutting down on travel because of which Conference service (Audio, Video) are getting the benefits.

          So if we take the bigger picture,yes being a part of this globe Telecom industry is also hit by the recession but as the phone being a very basic necessity for any person is the factor which made this particular industry to be less hit by the Recession.

Well,nowadays nothing is recession proof.Afterall everything is linked.
Still if we talk about specifically Telecom industry, i won't say that its recession proof but when compared to other industries Telecom industry especially Telcos are still doing good business and adding more subscriber every week,every month, every year and that is the thing which keeps on adding revenues to Telecom.There are a still a lot of places in this world which are very new to MobileCommunication. Telcos are now taking advantage to this situation and have started doing business in these areas to bring ample amount of revenue.
We can see a good amount of investment in areas like WiMax,3G. Companies are trying hard to improve QoS for VoIP network which will again bring down the international call rates.
These ongoing new things are keeping the Telecom industry alive and less hit by Recession.

I agred with Radha, their is no recession. It becomes a basic need of human life like food. Never find any reason for.

DID you know that Indian Telecom Industry has crossed 400 million connection by the end of JAA 2009 and also 0.20 million users were alone added in the month of JAN for broad band.

I don't think that the subscriber will reduce the number of calls they make. Rather I think that they will make more calls than before. Since travelling has become costlier they would try to contact their relatives and friends through calls and this will increase the number of calls made of them.