Inflation Management in Telecom Industry

Inflation Management in Telecom Industry

The global telecommunication market size was valued at around USD 1700 billion in the year 2021 and it is poised to grow USD 3100 billion by the year 2030. The reason for the growth of the telecom industry is the demand for communication through voice and video conferencing. Furthermore, the industry has primarily due to various factors such as-

• Favourable regulator conditions
• Increased accessibility
• Low prices
• Expansion of 3G and 4G

According to a study conducted by the Research Nester, in the year 2o22, there were almost 8.61 billion mobile phone subscriptions worldwide. Other than this, the telecom industry is umbrella term for the infrastructure involved in it, such as,

• Wired phones
• Mobile devices (Example- Cell phones)
• Microwave communication
• Fiber optics
• Radio & television
• Satellite communication
• Internet

Primarily four kinds of devices services are given under the telecommunication services through above mentioned means- Voice services, Data services, Internet based services, and cloud based telecoms.

Although, in recent years this vast avenue of market is shaken up with the turbulence of the inflation. In this blog, let us understand the impact of the inflation on the telecom sector. We will also witness that applying methodological strategies Telecom sector can remain resilient amidst the global crisis.

Impact of Inflation on Telecommunication Sector:

According to a research conducted by the Research Nester, it has been observed that inflation will push 5 categories which constitute almost 60.1% of the telco spending.

Worldwide inflation presents a serious risk for the telecom sector in terms of increasing costs and slowing market growth. Some of the other risks identified by the inflation are as follows:

-Inappropriate response to the customers during the cost of living crisis

Inflation is causing higher prices and decreasing the purchasing power of the customer. The cost of living crisis is causing households to scrutinize whether they all are getting sufficient value from telecommunication service provider. Recent study conducted by Research Nester shows the following results:

• 45.6% of the households consider that they overpay
• Almost 33.1% are planning to reduce more on the outdoor experiences
• Approximately 60.2% are concerned about their broadband provider who are raising the monthly prices
• 44.1% don’t think that broad band provider does enough to put them on best value deal

-Difficulty in improving the workforce culture and various ways of the working

The failure of the telecom market players to give more salary to upgrade the workforce culture occurs due to inflation. This has affected the staff and making them pessimistic about the working processes.

Also, the rise in costing makes the company unable to accelerate efficiencies through digitisation and various other means. Another study conducted by the Research Nester found out the below data:

• 39.2% think that high cost of technology infrastructure is an impediment
• 22.1% market executives witness complexity in integrating multiple systems
• 20.5% telecom market executives felt complexity in managing corporate partnership due to inflation

Let us now understand how telecom sector can overcome these challenges and flourish despite having challenges:

• Strategy of More for More Schemes from Telecom Sector

These kind of schemes are widely utilised in the market with the high inflation. Companies offer plans prices accompanied by the enhanced voice and data allowance. It has to be understood that inflation is an on-going issue. The utilisation of more for more schemes have reduced amount of the dissatisfaction. 

• Phased price hikes

The meaning of this term is to raising the price costs of various plans for the up coming customers. This strategy eventually helps in transitioning these prices to the existing customers in phased manner. Furthermore, the strategy is also helpful in churning out the dissatisfaction among the customer base.

Furthermore, here are some other strategies which can be utilised for managing the inflation in telecom sector are-

	Strategies
Preparation	Retention strategy, phased approach, base segmentation
Timing	Competitive assessment, challenger monitoring, macro-economic context
Execution	More for more scheme and customer reception
Communication	Clear & direct, explicit benefits for the clients and justifiable action

 

Wrapping up,

Apart from this, telecom sector can also take advantage from the inflationary context. The telecom companies have to find out the bright spots amidst the downturn spiral. Fabricating an efficacious roadmap for the industry helps in dealing with the inflation.

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