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How Mobile Carriers Can Better Understand Financially Stressed Customers During the Pandemic

Blog Post09/02/2020
Business
How Mobile Carriers Can Better Understand Financially Stressed Customers During the Pandemic

Financial strain is a common theme across the nation as consumers have either been locked out of their jobs or are struggling to pay their monthly bills due to the COVID-19 pandemic.

Looking into the reality of the situation, a majority of households across the US show substantial strain to their wallets as major industries have been negatively impacted, from tourism, to restaurants to retailers. A primary culprit is a reduction in working hours and hourly wages.

To help telecom companies benefit from a deeper understanding of these dynamics, TransUnion has conducted a Consumer Financial Hardship survey over the past four months.

Our survey helps markets understand how households are being impacted financially by the 2020 pandemic and offers telecoms a focused analysis and understanding of the impact on their business. TransUnion is helping telecom companies by providing access to rich information detailing these trends.

Analysis highlights:

  • 77% of US households that have been negatively impacted expressed concern about meeting their financial obligations
  • 57% of US households indicated that their income has been negatively impacted by the coronavirus pandemic
  • 17% of households with a mobile phone bill indicate they will not be able to make their payment
  • 15% of households with an Internet bill indicate they will not be able to make their payment

Due to the pandemic, telecom companies are feeling the sting of financially stressed American consumers. To better understand the impact and how to address it, we think it’s important to accurately determine projections for monthly revenue while reviewing customers’ ability to make their cell phone payments. And with the pandemic extending into the Fall and possibly beyond, having a clear picture of customer financial health from TransUnion enables better decision-making that gets in front of the challenges.  

Our survey reveals that more than half of US consumers have had their income negatively impacted by the coronavirus pandemic. In the latest wave of our survey on July 31, 2020, 57% of US households indicated that their income has been negatively impacted.

 

Percentage of households with negatively impacted income due to COVID19

As a result of this negative financial impact, a significant number of households report being concerned about their ability to pay their current bills and loans.

After being relatively stable at approximately 66% for several weeks, the percent of consumers indicating that they are concerned with being able to pay their current obligations has been trending up over the last four waves and now stands at 77%. Government stimulus checks have been a primary source of funds to keep many distressed consumers solvent. As stimulus money runs out for many, we expect this number will continue to rise in absence of another government stimulus.

 

Percentage of negatively impacted household concerned with being able to pay current loans and bills

Focus on telecom

As part of our telecom analysis, TransUnion looked at holders of different financial obligations and the percent that hold each type of obligation that indicated they will not be able to pay.

Relative to other financial obligations, the risk of nonpayment for mobile and Internet bills is much lower. With 15% of those with an Internet bill indicating they will not be able to make their Internet payment and 17% for mobile payments, these two financial obligations have the lowest risk of nonpayment of any of the financial products analyzed. This data speaks to the importance of these technologies in people’s lives. Once considered unessential, these technologies have become such an integral part of people's lives that from a payment priority perspective they appear to be prioritized over all other financial and non-financial obligations.

 

% of financial obligation holders indicating that they will not be able to pay that obligation (Wave 11 results)

Since mid-March when Transunion began the Consumer Financial Hardship study, an increasing number of consumers with negatively impacted income have reached out to lenders and service providers to discuss payment options. Starting at 40% of consumers in March the number rose to 58% in the most recent wave. However, a much smaller percentage, 25%, have actually enrolled in a financial accommodation such as a deferral, forbearance or payment holiday.

The types of debt or bills they have asked for assistance with differs. At 32%, student loans have the largest percent of consumers who have received some sort of assistance. This isn’t surprising since in many cases student loan lenders automatically enrolled borrowers into a program and didn’t require that consumers opt-in.

At just 6%, mobile/cell bills are the least likely to have holders enrolled in some type of financial accommodation.

Internet bills are close behind with only 7% having enrolled in some type of financial accommodation.

 

% of financial obligation holders indicating that they have enrolled ina financial accommodation for that obligation (Wave 11 results)

How consumers want to repay their deferred bills

Consumers and lenders alike are concerned about what will happen once the financial accommodations end. How will consumers deal with the mounting debt and obligations that have been building through forbearance and deferments? Consumers were asked how they would prefer to repay any deferred bill payments once the financial accommodations come to an end. Their responses point to potential insights into their financial situations. The top three preferences are:

  • 34% would prefer a repayment plan that will allow them to gradually catch up on the outstanding debt, while at the same time being able to make their regular monthly payments. This group appears to intend to pay all of their obligations, but given the hit their finances have taken as a result of COVID 19, they will need some additional help in the way of time to get their accounts back to current.
  • 28% would prefer to extend the accommodations for another few months. This group appears to be concerned with being able to pay their bills in absence of accommodations and, therefore, prefer an extension.
  • 23% would prefer to pay the amount due in a lump sum. These consumers may have had smaller dollar amounts deferred and/or may have taken advantage of the financial accommodations made available to them as a precaution and not necessarily due to hardship.

Demographic profile of those unable to pay their mobile/cell and Internet bills:

  • Geographic region:
    • Mobile/cell: The regional data is closely bunched together. The Northeast has the highest percent of households that indicate they will not be able to pay their mobile/cell bill at 18%, followed by the South at 17%, the West region at 16% and the Midwest at 15%.
    • Internet: The South has the highest number of consumers at risk of not paying their Internet bill at 16% with the Northeast close behind at 15%. The West and Midwest are both at 13%.
  • Generation: Millennials are the generation with the most consumers indicating they would not be able to pay their mobile/cell bill (21%) and their Internet bill (22%). The percent of Gen Xers indicating they can’t pay their mobile/cell bill is 18% and Internet bill is 13%. Baby Boomers are the least likely to not pay their mobile/cell and Internet bills at 8% and 6%, respectively.
  • Environment: Consumers in urban environments are at the greatest risk of payment for both mobile/cell and Internet bills: 22% indicate they are unable to pay their mobile/cell and 19% their Internet bill. Consumers in rural environments are similar in the percent of consumers that can’t pay their bills: 17% for mobile/cell payments and 16% for Internet bills. Suburban consumers are the least risky with 13% unable to pay their mobile/cell bill and 11% their Internet bill.
  • Income: 24% of consumers with an annual income of less than $50,000 indicated they will be unable to pay their mobile/cell bill, and 20% their Internet bill. For the income range between $50,000–$100,000 the percent not able to pay decreases to 12% for mobile/cell and 11% for Internet. For consumers with an income greater than $100,000, 10% say they cannot pay their mobile/cell bill while 9% say they are unable to pay their Internet bill.

A bright spot for telecom companies

Regardless of the product or service provided, all types of businesses are feeling the impact. However, our survey shows that relative to other industries, the mobile/cell and Internet sector could be feeling fewer consequences because consumers consider them critical to their lives and prioritize the payment of those bills before others.

Telecom companies can and should access data from TransUnion that gives them deeper perspective into these trends by visiting us online at transunion.com/industry/communications.

Learn more

For more information on how companies are being impacted, download the most recent Financial Hardship study or access reports for all weekly waves.


Legal Disclaimer: Please note that noted TransUnion analysis was based on responses to the company’s survey, and is not necessarily accurate nor complete information. Also, TransUnion does not intend, and this should not be interpreted as, legal advice; consult your legal counsel for questions and concerns about applicable law and your obligations.

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