SINGAPORE, 20 NOVEMBER 2008 - Despite dire financial conditions worldwide, Asian mobile operations in the third quarter of this year were little affected, according to consulting firm Ovum.
“There are a few exceptions where macro-economic conditions caused weakness, but generally impact is still modest and yet to be significant,” said analyst Nathan Burley.
Early signs are that mobile operators will be more resilient than most other telecommunications sectors and industries in the current economic climate, he said.
The slowdown will be measurable on mobile operations only in the fourth quarter of this year and next year.
“We may see intensifying customer focus on prices, some volume reduction and, perhaps positively, easing labour costs. However, no operators are changing guidance based on economic conditions alone,” added Burley.
Where changes in guidance have been made, these are more likely to be based on the competitive landscape than on macro-economic conditions.
Currency movements
Still, the huge currency fluctuations caused by the poor economy have adversely affected operator performance. For example, Singapore telco SingTel, which makes most of its money offshore via numerous assets across the Asia Pacific, has seen the Indian rupee fall 17.2 per cent year-on-year against the Singapore dollar, the Thai baht depreciate 16.9 per cent, the Indonesian rupiah fall 7.9 per cent and the Philippine peso depreciate 7.6 per cent.
It was expecting double-digit growth in pre-tax earnings contributions from its emerging market associates. Guidance is now for reducing contributions in the full year, largely due to currency changes, believes Ovum.
“All operators are being prudent and most have taken standard action to prepare for a deteriorating business environment. This includes cost-cutting and tighter cost management, freezing recruitment or scaling back jobs, and cutting discretionary spending,” said Burley.
