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US President-elect heralds a new beginning for TMT sector in 2021?

Unseating Donald Trump, the 45th US President Joe Biden will be the new occupant of the Oval Office on 20 January 2021 and he will be sending ‘blue waves’ across the globe. The US General Service Administration (GSA) has finally accepted Joe Biden as the President-elect and started formalising the transition from the Trump administration to the country’s 46th President — and, as it marks a new beginning in US trade relations with the world, will it also accelerate the recovery of the technology, media and telecom (TMT) sector in the new year? Home-bound Lara Tan, looking beyond the confines brought about by the Covid-19 pandemic, believes 2021 will be a bright year for the TMT sector.

During his Presidential campaigns, Joe Biden announced a US$1.3-trillion Infrastructure Bill, which includes ramping up rural broadband. The implementation of the plans will advance the US overall economy and create new job opportunities within the country.

Furthermore, he has proposed a $300-billion research and development (R&D) investment programme in cutting-edge technologies such as 5G, IoT and AI.

However, some observers and analysts believe that Democrats will focus on making new spectrums available for 5G rather than introducing dramatic changes to spectrum policies – resulting in a split of global technological standards and delaying the rollout of 5G.

Matt Kendall, Principal Analyst for Telecoms & Tech at The Economist Intelligence Unit (EIU), says: “The telecoms and technology sector will stage a recovery in 2021, but with so much uncertainty around, operators will have to prioritise investment that supports the increasing demand for data and protects network performance.

“Although governments and companies are keen to roll out 5G, they will have to make some tough choices in 2021, given the problems surrounding Huawei.”

US sanctions on Chinese tech companies could threaten their plans and delay 5G rollout across many countries that are relying on Chinese technology. Meanwhile, a new spate of lockdowns could also affect telecoms supply chains, raising prices and delaying shipments, product launches and 5G rollout schedules.

On the bright side, the lockdowns have spurred a new form of digital consumption. Mobile revenue will grow in tandem with new consumers’ online buying habits induced by the pandemic. For instance, consumers’ reliance on connectivity for everything from business to shopping and entertainment has shot up. Asia and the Middle East are expected to record the strongest growth in mobile revenues of 4.7% and 4% respectively in 2021.

The TMT sector will remain strong. Indeed, mobile subscriptions will recover by 3.4% in 2021, according to the EIU.

Driven by governments’ increased investment in infrastructures to improve digital access, cloud infrastructure providers will also fare better. The cloud businesses of Google, Amazon and Microsoft experienced double-digit rises in revenue in the first half of 2020.

At the enterprise level, companies will look to cloud-based solutions to help in areas such as network resilience, cybersecurity, disaster recovery and identity management, thus benefiting data centres that provide essential data storage and cloud services – driving further growth in enterprise communications in 2021.

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