Around the world, as lockdown becomes a reality for many, the number of people working remotely and the amount of leisure time spent in the home have both reached new levels. It means the TMT sector is experiencing unprecedented demand. Not only is there a spike in the use of existing services, but consumers are embracing new technologies and changing their behaviours. Television consumption has risen significantly since the lockdown and is proving to be a catalyst for the adoption of streaming video services.
News is a key driver of demand for content but, in the absence of sport and live events, other genres, such as movies and drama, as well as gaming, are all experiencing an increase. At the same time, there’s a spike in demand for connectivity and communications, for both business and personal use. Video conferencing apps are being downloaded in record numbers, previously physical activities are shifting online at pace and network traffic is rising as consumers adapt to new realities and adopt new behaviours.
Managing these heightened levels of demand presents challenges in the technology and telecommunications sectors. There is increased demand for network capacity but also pressure on other areas of their business, from supply chain and customer service to data protection and workforce well-being. As a result, telcos are carefully monitoring network resilience while adapting pricing plans and usage limits to ensure access and affordability. In collaboration with telcos, streaming companies have committed to reducing their output quality from high to standard definition to limit their bandwidth needs and ensure continuity of service.
Despite the increasing demand for their services there are pressures on all TMT businesses, not least working capital and cash management. As an example, a fall-off in advertising expenditure by key sectors such as travel, consumer goods and sports is impacting the liquidity of many media businesses which rely on advertising revenue. Companies across TMT need to reforecast their working capital models and think of new forms of cash pooling. They’re also working with regulators and stakeholders on options to defer tax obligations, upcoming debt covenants and ultimately seek net operating loss carry-back opportunities.
Additionally, many companies, particularly those that rely on live events that have been cancelled or deferred (such as concerts, film releases and software-user conferences) are reviewing the impact on revenue, income, and ultimately their sales pipeline. They are also assessing potential impairment issues relating to business once the impact of the crisis is understood and the recovery underway.
Actions you can take
- Adapt communications, product offering and value proposition with sensitivity to increased customer financial hardship
- Scale digital customer support channels and self-service options to support higher levels of customer outreach
- Move to e-retail direct-to-consumer sales
- Ensure continuity of call center and customer operations
- Prioritize data privacy and security considerations as customers move to remote service usage
- Monitor availability and resilience of networks and infrastructure, adapting planned capex and opex as required
- Collaborate with peers, partners and stakeholders to optimize service quality and continuity
- Conduct end-to-end supply chain risk assessments,including programs for a supplier counter-party risk assessment
- Model alternate supply scenarios and trade-offs
- Actively review and test controls that monitor for supply-chain fraud and compliance
- Develop new supply chain forecasting models to understand product availability
- Segment receivables by COVID-19-affected customers to understand exposure
- Model impact on delayed receivables against opportunity to delay payments
Claims and compliance
- Evaluate client loss/risk situations and engage with claims services to analyze, prepare, present and settle complex business continuity claims
- Evaluate effectiveness of compliance and integrity management to avoid non-compliance
Financial matters and tax
- Assess financial impact of closures and stranded costs such as risks, provisions and impairments
- Ensure forecasting of changing supply/business models is robust and understood by markets
- Evaluate and advise on treatment of potential catastrophic losses for tax purposes
People measures and restrictions
- Explore human capital considerations, including crisis management frameworks and contingencies
- Support frontline staff and government-identified key workers (e.g. field technicians, network engineers) with new protocols, tools and capabilities
- Test and implement new technologies/remote collaboration platforms while the COVID-19 pandemic persists
- Explore and implement managed services to allow companies to focus on core activities
Questions you should ask
- Do we have a full global view of the COVID-19 tax incentives and stimulus packages that are available?
- Can we work with technology and ecosystem partners to quickly understand how our markets have changed, and adapt to those new dynamics and risks? Do we have the tools and models to develop new supply chain, cash, revenue, and cost models?
- Are we considering all of the physical and cyber security threats our company and people are exposed to?