Forecasts for the telecommunications market in Poland. The COVID-19 effect in 2020 is visible.
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PMR forecasts a positive economic situation on the telecommunications market in Poland over the next six years. The exception is 2020, which will bring stagnation of the market or, in the worst case, a slight decline in its value. The reason for this is the COVID-19 crisis and therefore the worse macroeconomic situation and negative market factors such as lower sales of telecommunications equipment or roaming services.
COVID-19: stagnation in the telecommunications market in 2020
PMR forecasts assume a positive economic situation for the telecommunications market in Poland in the following years, taking into account also the epidemic factor. The exception will probably be the current year, when the COVID-19 pandemic will cause stagnation in the market, or in the worst case, a slight decline in its value, visible mainly in the mobile segment. An important element that determines the position of the market in times of crisis is its maturity and strong saturation with services. The coronavirus epidemic has clearly shown that telecommunications services are one of the critical elements of the functioning of today’s society, business and the whole country. There are no grounds for assuming that services will not be subscribed to, even in the case of recession. At the same time, one should be cautious when assessing the demand for additional services in telecom packages or higher subscription plans (the exception is broadband Internet access). In the perspective of this year, some purchase plans in this area will be postponed.
Mobile segment: price increases for mobile services in 2019 as a shock-absorber for the market
In the short term (2020), the COVID-19 crisis will slow down or even reverse the growth dynamics in the mobile segment due to lower revenues of operators from the sale of telecommunications equipment (supply chain disruption), which accounts for about a quarter of total mobile revenues, and revenues from roaming services. However, an important cushioning factor for these decreases will be the price increases in mobile services which took place last year and whose positive effect should be visible in operators’ results for the first time this year. The situation on the wholesale market will also have a positive impact. Increased traffic on the retail market (business calls due to remote working as well as individual calls) will result in higher revenues from interconnect services.
Limited revenues from the first 5G networks in Poland
PMR does not expect any dynamic growth in the number of users of the first commercial 5G networks in Poland this year. A significant limitation will be the low availability of equipment supporting this technology on the market, exacerbated by the COVID-19 crisis and the disrupted supply chain of IT and telecommunications equipment. Moreover, customers do not yet fully feel the need for such a technological change. They are satisfied with 4G network speeds (LTE/LTE-Advanced), which de facto coincide with those offered in the first 5G networks on the 2 100 and 2 600 MHz frequencies However, the launched 5G networks in the 2 100 and 2 600 MHz frequencies are still only a substitute for this technology, compared to the so-called C-band, which is fully valuable for providing fifth generation services. 5G on the 2 100 and 2 600 MHz resources therefore has mainly marketing overtones. A certain barrier is also the territorial coverage of the services provided, but to some extent also the stigmatisation of the 5G network as a technology dangerous to human health. As a result, the earnings potential of MNOs on 5G services remains low at present. Even if operators will soon launch dedicated 5G tariffs (at this point in time, operators generally add 5G service to the subscribers of selected existing tariffs for free), this year’s falling GDP and limited household spending will have a negative impact on the monetisation of 5G services.
COVID-19 and additional demand for higher broadband speeds
In the fixed segment, the COVID-19 crisis will primarily affect the DLISP segment, including internet access services. Classical broadband becomes even more important in the context of the COVID-19 epidemic. The remote working model becoming established, but also greater awareness of the need to use the internet by part of the population, will result in increased demand for higher network capacities.
COVID-19 neutral impact on the pay-TV market
In the forecast model adopted by PMR, the pay TV market in Poland in 2020-2025 will enter a period of stagnation, with a slight downward trend. This will be visible both in terms of volume and value. However, the impact of COVID-19 on the pay-TV market will be small, and the marked trends will result from natural market development and strong service saturation. On the other hand, the epidemic factor strengthening the role of television will allow, among others, to slow down the phenomenon of cord-cutting, which is not yet of a mass character in Poland. It will also encourage some Poles to subscribe to a higher price paid TV offer due to additional channels received during the pandemic. However, such purchases will be spread over time. This year, due to lower GDP, will be a constraint on demand for additional premium channels. The impact of COVID-19 on the pay-TV market also includes changes in purchasing trends for additional premium sports channels or higher TV packages with access to these channels.