Despite economic headwinds, rising demand for bandwidth and government support could help broadband companies compete and prosper.
Even in the face of today’s economic headwinds, companies building out fiber networks or providing high-speed internet service could benefit from multiple factors that can help them stay resilient and keep growing. Surging demand for bandwidth, $65 billion in new federal spending, robust financial support from private equity and infrastructure investment funds, and M&A involving fiber companies are among the tailwinds for this industry in 2023.
To be sure, companies will need to manage near-term economic realities. There will be higher volatility and downward pressure for many customer segments that will hurt revenue growth and cash flow. Labor shortages and inflation will make deployments and operations more expensive. And high cost of capital will impact the ROI of new deployments and edge-outs.
With these realities in mind, we believe that fiber service and broadband providers need to balance efficiency and capital preservation with growth and positioning for the future. This means developing strategies to take advantage of the new federal and private funding while maximizing resiliency, operational efficiencies, and agility. Finding ways to retain customers; looking for areas that could yield rapid performance improvements; establishing partnerships with state and local agencies and utilities; and considering M&A opportunities for expansion all could be part of plans to stay strong and resilient now while laying the groundwork for outsized growth as conditions improve.
Download our report to find out more about today’s challenges and opportunities and for KPMG deal professionals’ views of what may lie ahead.