Despite the decline in consumer spending, the telecoms industry will continue to grow at a faster rate than the UK economy due to continued investment in new developments such as wireless and IP technology, according to the latest Post and Telecommunications Review from Lloyds TSB.
The report, compiled by Lloyds TSB Corporate Markets’ Economics team, analyses the impact that the economic slowdown is having on the telecoms sector in the UK and assesses the health of the European market as companies face increased pressure on their margins. It reveals that, although the telecoms industry is set to experience a modest slowdown due to declining household spending, strong demand for integrated IT and telecom services and the rollout of new technology should help to stabilise revenues for major operators over the next few years.
Nichola James, Senior Economist at Lloyds TSB Corporate Markets, explains: “The UK telecoms sector is not immune from the wider economic slowdown, and as a result we expect growth to slow in 2008 to 1.7% (4.9% in 2007), before rising to 4.5% in 2009. However, the industry continues to enjoy a strong performance compared with other sectors, and is set to benefit from a number of new opportunities that could provide a sustained platform for growth such as the rollout of fibre optic networks.
“The outlook for Europe is more mixed however, as the fragmented regulatory framework has created divergent conditions and the market for telephony becomes increasingly saturated. Despite this Spain is the clear leader – with anticipated strong growth of 6.0% in 2009 – closely followed by Sweden, the Netherlands and the UK.”
Richard Price, MD and Head of the Lloyds TSB Corporate Market’s Telecoms Sector commented: “The integration of media and telecoms services, together with the development of wireless associated technology and the increased appetite from consumers for interactive media, is likely to provide operators with more stable revenue streams in the years ahead.”
Similarly, the transition to digital television and the rollout of fibre optic networks should accelerate the take-up of advanced services amongst households and offer further market possibilities to develop new products and services.”