About three quarters of telecom companies are at risk of defaulting or declaring bankruptcy due to their respective debt burdens, according to new research.
Business advisory firm AlixPartners believes that debt chiefly accumulated from high infrastructure and acquisition costs now looms over many telecom companies, FT.comsaid.
AlixPartners also estimates that more that than four in ten companies across the entire telecom and technology sector are at “high risk” due to debt.
While the technology industry emerged from the economic crisis fairly unscathed, debt is now just one of the challenges the sector is facing – others being narrowing margins, rapidly shifting consumer demand and the need for heavy capital expenditure in a difficult market environment.
Consumer electronics makers are even more exposed due to their thin profit margins and fierce global competition – AlixPartners estimates that as many as nine in 10 companies in this segment are at risk.
The firm now expects “industry-rattling” changes across the technology sector as companies seek to address these economic conditions.