‘Whatever it takes’ is the phrase currently on every finance minister’s lips, as the financial impact of the coronavirus pandemic becomes all too clear. Governments around the world are reaching deep to prevent economic collapse, and sums of money that would recently have been regarded as irresponsibly large are suddenly seen as barely sufficient. Immense debts will be incurred, and already there are whisperings that capital spending will need to be rethought.
It is a common refrain in IIC debates that investment decisions, especially for 5G, are marginal. As one contributor put it, ‘many operators are concerned about investing in a technology with little consumer demand based on a model of 20 years ago, when the industry was growing rapidly’. Return horizons are already distant but, as another speaker suggested, growth will be supply, rather than demand-led. The network needs to be built out in anticipation, rather than absence of, new business models. If operators were under financial pressure pre-coronavirus – and many were – then the situation post-coronavirus will be considerably worse.
Although the next few months are uncertain, one thing we do know is that, at some point, the world will be through the either side of this emergency – either eradicating, or learning to live with, coronavirus. When that happens, the digital economy will be a critical driver of economic recovery and growth. Governments will need to ensure that the industry is supported, and incentives to invest re-cast wherever necessary. Whatever that takes.
As the financial effects of the COVID-19 coronavirus begin to bite, Andrea Millwood Hargrave looks at the pressures on the world's mobile operators. Already operating under financial pressure with small margins, particularly with 5G, they may need government support in the future to continue to promote investment in new technologies.
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