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Confronting the Crisis

Its Impact on the ICT Industry, Febuary 2009

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This report focuses on the financial crisis and its impact on the ICT industry and covers areas such as telecoms, the internet, ISPs and media/content delivery platforms. While the economic turmoil may challenge some, it can also overturn the established order and stimulate the emergence of new entrants with new technologies in the innovative ICT industry.

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Impact of the Financial Crisis

One of the more obvious effects of the credit crunch is a reduction in and more expensive credit for investment. A prolonged credit crunch and financial crisis could potentially starve operators of the capital investment needed for upgrades to network infrastructure. Some telecom operators are already experiencing difficulty obtaining financing (e.g., AT&T experienced difficulty selling commercial paper, an unsecured debt instrument for meeting its short-term liabilities in the US in mid-2008). Many network upgrades envisioned for the next two-three years are financed through debt and may stall due to lack of available credit. Further, funding issues are unlikely to be resolved until the banking sector is fully recapitalized.

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