The article below is from our BRIEFINGS newsletter of 08 October 2021
Telecom, cable, media and mobility companies saw a surge of growth when the pandemic began, but how are they faring now that people aren’t quarantined at home? We sat down with with Goldman Sachs Research’s Brett Feldman, Stephen Laszczyk and Eric Sheridan following the firm’s 30th Annual Communacopia Conference to discuss what industry leaders are saying.
Cable and telecom sectors were among the biggest beneficiaries during the pandemic. What’s their outlook as economies reopen?
Brett Feldman: The major cable companies have benefited from strong growth as people relied on broadband connections for work, school and entertainment during the COVID-19 lockdowns. But the companies signaled that they expected growth to moderate in the third quarter. So investors are asking whether this is simply a natural moderation of growth following a period of overwhelmingly strong demand or whether we’re seeing a shift in the competitive landscape. Telecommunications firms, for example, are emerging as a competitor, as they look to supply fiber networks to people’s homes. Overall, however, the cable companies highlighted underlying growth opportunities: Broadband is generally underpenetrated in many markets, providing further room for upside, and the management teams at the conference highlighted the significant network investments to deliver gigabyte-capable speeds and new products, such as in-home mesh Wi-Fi and free streaming hardware.
What about the outlook for media companies—what’s the appetite for streaming services?
Brett Feldman: Several media companies reported some deceleration in the growth of their streaming subscribers. So the question again for investors is whether this deceleration is a signal that the overall market for streaming is going to continue to moderate as people come out of lockdown, or if we’re just starting to learn more about the seasonal cadence of these products as we move into a potentially more normal operating environment.
Let’s talk about the flip slide—how are industries dependent on in-person traffic faring?
Stephen Laszczyk: Live-events companies signaled they’re continuing to march ahead toward normalcy, albeit having to adapt to some of the curveballs thrown by the delta variant. Demand looks strong on both sides of the ticket: Artists, for their part, are looking to tour again and connect with their fans—and obviously, touring contributes a big part of their income. Meanwhile, the demand from fans, who are looking to experience live events again, is just as strong, in some cases surpassing the demand we saw in 2019, pre-pandemic.
Eric Sheridan: We also heard from travel and mobility companies that people are getting out and about. As more people get vaccinated, they’re going back to school and back to work, although the travel picture has been a bit more volatile. This was an industry already facing slower growth prior to COVID-19, so we think companies' pandemic shifts toward local offerings and marketing targeted at deepening customer engagement are likely to stick, and we heard that echoed by presenters at our conference.