Connectivity services tend to suffer mildly, if at all, in recessions. We are more likely to see zero growth rates than anything else. But even that assumption relies on assumptions that are as "novel" as COVID-19.
Economies tend to go into recession for reasons related to lower demand. In this case a biological threat has lead to swift and voluntary suppression of demand that is likely to induce a recession--a sharp one at that--as a deliberate byproduct of health policy.
For connectivity providers, the other unusual element is that social distancing policies which keep people at home, and away from work and school, increase the value of communications services of all types.
So we are in highly unusual times, where past rules of thumb might not have much predictive value, either for short-term or longer-term consumer behavior. Worst case, based on past experience, connectivity providers could see slightly negative revenue growth, or simply growth rates of zero.
That is not pleasant, but is nothing like the hits other industry segments are likely to experience as a result of the shutdown of large parts of the global economy. The bigger questions concern what happens as we come out the other side of the health crisis. "When" is one issue, but the other big questions relate to "how" the recovery occurs.
It would be rational to expect a "U"-shaped recovery. But some will argue for a "V-shaped" rebound, simply because the normal demand drivers arguably remain intact, and the demand suppression comes from health policy. Some might argue a recession caused by a demand shock of this type is not the typical case, and therefore the recovery might also be atypical.
The swiftness of the shock is hard to ignore, though. Few, if any of us, ever have experienced such a sudden deceleration of global economic activity as being imposed by the Covid-19 pandemic.
According to Enterprise Technology Research, in the span of five days, enterprise chief information offices revised expectations about information technology spending growth form two percent annually to less than zero.
That is sudden, indeed.
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