Widespread network outages — such as the one last month in the U.S. affecting tens of thousands of AT&T subscribers as well as Rogers’s network outage in July 2022 — underline the critical nature of connectivity and the need for continuous infrastructure investments in the telecom space, says a new commentary from credit rating agency Morningstar DBRS.
Other recent network outages include a 12-hour outage experienced by Australia’s Optus in November 2023 that affected more than 10 million customers, and a Sky Mobile outage in the U.K. in May 2023 that lasted multiple hours.
Morningstar DBRS says in its commentary that widespread network outages can severely affect broader and essential services, including healthcare, financial transactions, law enforcement and transport systems, given the ubiquitous nature of the telecom sector.
In addition, such events highlight not only the need for infrastructure investments but also a favorable regulatory framework that supports infrastructure spending and telecom provider collaboration in periods of crisis, Morningstar DBRS says.
“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,” Vikas Munjal, vice-president of diversified industries at Morningstar DBRS, said in a statement. “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.”
