Widespread Network Outages Underline the Critical Nature of Connectivity and Need for Continuous Infrastructure Investments

This commentary discusses the impact of widespread network outages and how these events underline the critical nature of connectivity and need for continuous infrastructure spends in the telecom space.

Key highlights are as follows:
-- Widespread network outages can severely affect broader and essential services given the ubiquitous nature of the telecom sector.
-- Considering that such telecommunications outages are usually infrequent, they are unlikely to have long-term implications or credit impacts on large telecom companies.
-- Such events highlight the critical nature of telecom services and the need for infrastructure investments and favorable regulatory framework.

“While these infrequent network outages are unlikely to have a credit impact on large, diversified telecom operators, these events highlight several important considerations for the telecommunications industry, including all stakeholders, such as regulators and investors,” said Vikas Munjal, Vice President of Diversified Industries at Morningstar DBRS. “That said, repeated occurrences or a longer duration event could pose reputational risk as well as high churn and new subscriber acquisition risk for these telecom operators.”