Cracks in the surface of global operators’ business revenue streams appeared in results from the first quarter of 2020, according to a new report from Analysys Mason. 

The global pandemic’s effect on carriers’ financial performance will likely be more pronounced in the current quarter, as lockdown restrictions are expected to remain in place through the majority, if not the duration, of the three-month period.

Earnings reports for the first quarter were “filled with warning signs about the impact of the COVID-19 crisis,” analysts wrote in the report. The decline was particularly abrupt and troubling following a “reasonably successful 2019” where operators reversed negative revenue trends and largely returned to growth.

Average business revenue growth swung from a 0.6% decline worldwide in 2018 to a 1.2% gain last year, according to the firm’s analysis. Operators at large now expect business revenue to decline significantly this year, the report found. 

“Most operators were only affected by the COVID-19 crisis in the last two or three weeks of the quarter,” but the damage could not be absorbed by previous gains, according to Analysys Mason. “Most operators have withdrawn revenue guidance amid such uncertainty, but some operators have attempted to provide rough guidelines for the impact.”

The firm also noted that operators’ small business divisions will likely be most heavily affected by the pandemic. “Large enterprises have spent money to prepare for working from home, while small businesses have cut costs. Businesses of all sizes have postponed upgrades or have downgraded.”

Moreover, with global the pandemic hitting amid a widespread dash to deploy 5G, Analysys Mason predicts some “disruption to network deployment and weaker demand from consumers and businesses in the middle quarters of 2020.”

However, it added, “the reduced demand is likely to persist for a longer period than the network disruption and will drive operators to intensify the focus of their 5G strategies on cost reduction rather than new, enterprise-driven revenue streams,” the firm’s analysts wrote in a separate report.

Analysys Mason is “optimistic that 5G capex will bounce back in 2021, but the scale will be dependent on new business demand.” 

Network deployments, spectrum auctions, the formalization of standards, and labor involved in the supply chain will all be negatively impacted this year, according to the firm.

“These and the wider economic uncertainty will drive some operators to rethink their investment priorities or timelines,” it added. While most operators will remain committed to existing capex guidance for the next year or so, there will be some reassessment of priorities, especially in Europe, the firm predicted. 

“5G capex will decline slightly in 2020, and we now believe that this will be 7% less than our pre-COVID-19 forecast. 5G capex will start to bounce back in Q4 2020 and into 2021, and it will be 9.7% greater than our previous forecast for 2021 as a result,” the analysts wrote.