YOU ARE AT:5GCOVID-19 pandemic to delay 5G rollouts in Europe by 12-18 months: PwC

COVID-19 pandemic to delay 5G rollouts in Europe by 12-18 months: PwC

 

The COVID-19 pandemic will delay the rollout of 5G networks in Europe by 12 to 18 months, according to a recent by PwC.

According to the report, European telcos’ investment spending over the next two years will fall by €6bn-€9bn ($7.1bn-$10.6bn).

“Telcos need to act urgently to address the squeeze on their 5G investment plans. Specifically, they must review their 5G business cases and deployment timetables, given the significant growth and changing pattern of demand for network capacity that has emerged due to the COVID-19 lockdown,” PwC said.

“We expect a reprioritization of capex plans across all areas of the business to secure sufficient funding, to continue investing in 5G and to partially mitigate the risks of delaying deployment, while at the same time coping with increasing demands on their fixed infrastructure. This will involve tough choices: a complete review of capex plans, a drive to achieve further capex efficiencies and delays to selected transformation projects in other areas.”

PwC noted that delays in 5G deployment carry serious risks and costs for operators, as many of them own time-limited 5G spectrum licenses and will struggle to achieve their return on investment (ROI) targets the longer they delay rolling out services.

“Operators’ original business cases also depended on delivering not only faster versions of services available today, but also entirely new applications to support the Internet of Things (IoT) and autonomous vehicles, for example. Unless these can be delivered, the business case for 5G will be compromised. Delays in 5G investments also pose serious risks for equipment vendors whose sales for the next two years may be jeopardized. Finally, regulators also face challenges because their plans to develop the digital economy depend heavily on the telcos’ ability to deliver nationwide 5G connectivity.”

The report also highlighted that investments in innovative platforms and service development could be paused indefinitely, pushing many of the advanced applications of 5G technology, such as many IoT use cases, further into the future.

“The COVID-19 crisis is highly likely to lead to a marked slowdown in investment by European telcos over the next two years, particularly in mobile networks. This will have major implications for the rollout of 5G services. There is no doubt that 5G will remain the near-term technology priority for telcos, however we believe the business cases that telcos have previously adopted will have to be revised. More ‘blue sky’ applications that depend on 5G, such as dense networks of micro-cells to provide ubiquitous connectivity for autonomous vehicles, are likely to be put on hold,” PwC said

The consultancy firm also noted that in those European countries that have not yet sold 5G licenses, operators may be reluctant to make major investments in new spectrum under the current conditions. In this scenario, PwC expect the pace of 5G rollouts in these countries to slow significantly.

“In order to preserve sufficient headroom to invest in 5G rollouts, operators should undertake a major rethink of their capex allocations across all areas of their business and further improve their management of capex to realize efficiency gains. At the same time, suppliers need to reconsider their production and investment plans to cope with slowing 5G investments.”

ABOUT AUTHOR

Juan Pedro Tomás
Juan Pedro Tomás
Juan Pedro covers Global Carriers and Global Enterprise IoT. Prior to RCR, Juan Pedro worked for Business News Americas, covering telecoms and IT news in the Latin American markets. He also worked for Telecompaper as their Regional Editor for Latin America and Asia/Pacific. Juan Pedro has also contributed to Latin Trade magazine as the publication's correspondent in Argentina and with political risk consultancy firm Exclusive Analysis, writing reports and providing political and economic information from certain Latin American markets. He has a degree in International Relations and a master in Journalism and is married with two kids.