The coronavirus (COVID-19) outbreak is causing widespread concern and economic hardship for consumers, businesses and communities across the globe. The situation is changing quickly with widespread impacts. We’ve prepared some general guidance on COVID-19: What US business leaders should know: crisis management and response, workforce, operations and supply chain, financial reporting, tax and trade, and strategy and brand.
Most companies already have business continuity plans, but those may not fully address the fast-moving and unknown variables of an outbreak like COVID-19. Typical contingency plans ensure operational effectiveness following events like natural disasters, cyber incidents and power outages, among others. They don’t generally take into account the widespread quarantines, extended school closures and added travel restrictions that may occur in the case of a health emergency.
The crisis raises a number of unique challenges. In PwC’s inaugural COVID-19 CFO Pulse Survey, finance leaders in the United States and Mexico shared their top concerns.
Here is our take on some issues companies in your industry may face:
The ongoing shift to remote work will drive demand for networking infrastructure and connectivity. However, the demand could also strain the system and lead to public perception issues if reality doesn’t meet expectations.
The raft of industry event cancellations means fewer business development opportunities via sponsorships and networking.
Cancelled domestic and global business travel results in a sharp increase in mobile communications.
Telecommunications is a people-intensive industry, with a seasoned workforce that includes teams in offices, on trucks and in retail storefronts. If they are forced to work remotely, that could impact productivity.
Remote work could increase security and infrastructure risks for customers and telcos. Some elements of telecommunications work cannot be easily duplicated remotely — or in some cases done at all.
Compensation policies for sick time may not be adequate for hourly workers.
Front-line employees — such as retail customer representatives or field technicians who regularly visit customers — may have concerns about COVID-19 exposure and transmission.
Telcos have effectively diversified their supply chains, However, some of the current disruption could result in future dips in equipment revenues. Major mobile handset suppliers have significant exposure to slowdowns in Asia. While a number of telcos are trying to stockpile inventory to mitigate impact, that approach has limitations (see next section “Financial reporting”).
The manufacture and delivery of network equipment will likely be delayed, slowing 5G and fiber network builds.
Excessive demand on mobile and communications networks — including temporary suspension of data caps — could affect service quality, creating a ripple effect as companies across various sectors implement remote-work plans.
Communications providers are dependent on large call center operations to perform critical functions, such as sales and customer service. The majority of retail locations are now shut down, forcing a huge spike in volume through call centers, testing their ability to adjust at scale.
Operational, workforce and supply chain disruptions will trigger financial reporting implications in current and future reporting periods.
Stockpiled inventory can impede cycle counting and period-end physical counts.
COVID-19 will delay 5G delivery, which could affect revenue and CapEx projections.
A number of telcos have high debt loads, which could put pressure on their debt-reduction programs, as dividends are maintained.
In the short term, changes to income statements — such as short-term losses — will affect forecasts.
Supply chain reconfiguration will trigger tax implications.
Tax compliance operations could lag as newly remote employees lack timely access to information.
In the short term, as more businesses enable remote work and consumers switch to unlimited plans, telcos have an opportunity: If they can support remote working across all industries, while giving consumers a positive experience throughout the crisis, they will enjoy a boost to the brand.
In the long term, challenges will include cost-cutting, as commodity services will likely become cheaper.
Telcos face challenges from the uncertainty caused by the pandemic; they must be prepared to react accordingly.
The potential for a recession is real. Businesses are likely to delay capital spending, and an uptick in unemployment could put pressure on the B2C business.
The crisis underscores the need for more flexible, resilient business models.
It may be too soon to assess long-term impacts, such as the need for restructuring.
In addition, telecom companies may face some additional industry-specific challenges.
Customers experience deep levels of uncertainty, requiring telcos to be flexible to remain responsive to their needs.
Rising demand adds pressure to the network, which affects service levels at call centers.
The lifeblood of modern communications, the telecommunications industry has been relaying messages between individuals and businesses for almost two centuries — even during crises. This crisis is no different. Stress-tested for resilience during the past 200 or so years, the industry will surely evolve again after this crisis, emerging even more prepared for the decades ahead.