Forex not Netflix keeps your mobile operator awake, says BDO

24 July 2018

The newly released BDO Global Telecommunications Risk Factor Survey reveals that telecommunications executives have relegated disruption from new technologies to third place in their risk top five. The number one risk identified by 60 telecommunications companies surveyed right now is exchange rate volatility.

The latest edition of the BDO 2018 Telecommunications Risk Factor Survey ranks the five most significant risks facing telecoms companies as follows:

  1. Exchange rate/foreign currency changes
  2. Increased competition
  3. The fast arrival of new technologies
  4. Access to finance
  5. Interest rate pressures

The telecoms market is especially vulnerable to volatile exchange rates because of its growing cross-border customer base. Global incidents including Brexit, the North Korea negotiations, regulatory agendas and Trump’s trade war are just a few of the risks that shake up exchange rates.

Telecommunications’ structural dependency requires capital to upgrade and build the infrastructure to keep up with markets’ technology expectations and this underlies 2 further risks in BDO’s top five: namely, access to finance and interest rate pressures. Credit ratings in the industry are not at the levels they used to be, and profit per customer seems to be falling, which means that access to funding presents a significant risk. In the same vein, telecommunications executives rate profitability risks as being three times higher than in 2017. Risks associated with gaining market share are up by 100% in BDO’s risk survey, while risk from saturation/decline of the telecoms market is up by 80%.

Natalie Milne, National Lead, TMT at BDO said “The mix of short-term, unexpected risks and long-term pressures felt by the industry as a whole, means that winners in the telecoms sector are those companies who proactively find ways of updating and expanding their value proposition and managing the risks facing the industry.”

These are just a taste of the conclusions of the BDO 2018 Telecommunications Risk Factor Survey. Now in its fourth year, the report analyses risks identified by around sixty telecoms companies worldwide, covering key markets in the Americas, EMEA and Asia Pacific regions. This year’s edition of BDO’s risk survey also analyses recurring trends and ongoing developments in the telecoms space, including digital transformation, regulatory burdens, the growth of cyber warfare and macroeconomic and political volatility. The full report can be downloaded here.