How does the coronavirus disease affect the communications market and the relevant regulations?

Published: 29 April 2020

Pursuant to the decisions of the European Union and based on the reports of various international research companies, the National Media and Infocommunications Authority (NMHH) has been preparing regular summaries of the changes in the market and international regulations since the outbreak of the epidemic. Over the last month, these have led to a focus on forecasts about the future of telecommunications companies, delays regarding 5G, as well as the recommendations of the European Commission on the use of mobile applications and mobility data.

In the efforts to provide defence against the epidemic, the value of infocommunications services has increased even more, since they are indispensable for correspondence, remote education and telecommuting. However, the crisis affecting the economy can put even this sector in a difficult situation. Of all the issues covered by the NMHH trend evaluation summaries, there are four subjects that deserve particular attention: the temporarily deteriorating prospects of the telecommunications sector, the weakening performance of telecommunications companies on the stock market, the protracted deployment of 5G networks and the issue of whether mobile cell information can be used in the efforts to curb the epidemic.

3.4-percent decline expected for telecommunications companies

According to the April forecasts of Analysys Mason based on the assessment of 32 countries, including Hungary, the epidemic will have a less negative impact on the telecommunications sector—compared to other economic operators—due to its relative flexibility, thus a 3.4-percent decline is forecasted for 2020. Last year, the research firm forecasted a growth of 0.7 percent, therefore, the overall loss can amount to 4 percent. Nevertheless, telecommunications operators may be capable of managing the situation by postponing investments and cutting back on operational costs. As a result of unemployment, however, the full consolidation is only expected by the end of 2022. Based on their assessment, mobile companies will most likely find it difficult to encourage consumers to choose mobile packages with higher tariffs, which will further reduce their average revenue per subscriber, which is confirmed by the new promotions of some service providers. Growing unemployment will also reduce revenues this year and even in the year to come. There will also be a dip in the purchase of new devices, which will impede the spread of 5G services. Service providers will not be able to compensate for the drop in roaming revenues outside the European Union even in the year to come. However, the epidemic will have no dramatic effect on the fixed services segment, although growth will be lower than forecasted, as on-site installations may falter due to the epidemic. Although the revenues of mobile companies derived from their services provided to the business sector will be reduced due to the lack of business trips, this will be partially offset by the use of mobile phones provided to some employees working from home during the epidemic.

13-percent drop in the value of the shares of telecommunications companies

The fact that telecommunications companies will not remain unaffected by this period is already clearly shown by stock market prices. The Reuters report of 14 April focused on the so-called MSCI index, which represents the performance—average share price—of over 1,600 companies from 23 countries (not including Hungary). According to the analysis, the MSCI index of telecommunications services has dropped by 13 percent since the beginning of the year, compared to 6 percent in healthcare, 8 percent in technology companies and 10 percent in consumer goods.

According to Reuters, multiple analysts consider this to be due to the additional burdens and forced expenditures that companies must make to maintain their services and serve their online businesses. For the time being, despite its apparent logic, telecommunications companies are not the winners of the epidemic, no matter how well they can cope with the rush of increased traffic.

What will happen to the deployment of 5G networks?

Due to the current economic situation, the deployment of 5G networks may be delayed by a year, according to the initial surveys of, even though a few months ago all the consultancy companies referred to 2020 as the year of 5G. The sale of frequencies also shows mixed results. In some countries, there is an undiminished interest in the spectrum parts that are valuable for 5G systems, while elsewhere the sale of frequencies has been postponed due to the epidemic. Regarding the situation in Hungary, it is encouraging that on 26 March, the NMHH sold the majority of the frequencies covered by the tender procedure announced last year—which attracted great interest—for a total of over HUF 128 billion, while Telekom launched its commercial 5G services on 9 April, as the second operator to do so in Hungary after Vodafone.

Need for a single European data use approach

The summary prepared by the NMHH briefly deals with the European Commission’s recommendation of 8 April, which describes the necessary measures regarding the use of mobile applications and mobility data to combat the coronavirus disease. The reason for this is that the various national measures—such as geolocation-based tracking—are a cause for concern in terms of fundamental rights.

The Commission has already stipulated certain general safeguards, including the restriction of the processing of personal data only for the purposes of combatting the epidemic caused by the virus, and not for commercial or law enforcement purposes. The need for the personal data must be regularly reviewed, and once their processing is no longer necessary, the personal data concerned must be destroyed, unless their scientific value outweighs the impact on the personal rights. Nevertheless, the Commission emphasized the great need for the use of mobility data in mapping and forecasting the spread of the epidemic, estimating the needs of hospitals, and increasing the efficiency of restrictive and other measures.