By Diana Goovaerts
Operators wrestle with 5G capital spend
A trio of operator CEOs confessed they are apprehensive about the capital outlay necessary to build 5G networks, given low return on investment from 4G, and revenue pressure from regulation and competition.
During yesterday’s opening keynote, Telstra chief Andrew Penn (pictured right) said return on capital investments for operators globally stands in the mid-single digits and continues to decline. He said operators need to tackle the following questions: “How do we make sure we’re not in the same position in another ten years? How do we make sure that when we’re talking about 6G we haven’t missed the opportunity with 5G?”
Similarly, Liberty Global CEO Mike Fries (pictured left) admitted most operators in Europe are “nervous” about the 5G expense and remain “uncertain about the business model”.
He added: “You’ve had ten straight years of declining mobile revenue in Europe with the biggest issue being price. Consumers want more for less.”
Penn added operators will likely need to rethink their commercial strategy, including how they package and price products for customers. “I fear if we don’t do that we will end up in a situation where we, ultimately, are just providing the carriage and the margins get reduced down to that level.”
Beyond the consumer market, Fries and Penn pointed to enterprise and industry as important opportunities for operators to generate revenue through the deployment of technologies including automation and robotics.
Hatem Dowidar (pictured centre), CEO of Etisalat International, explained different markets have different needs, noting operators in many emerging markets have only just finished rolling out 4G. There, he said, the focus is on generating return from 4G investments before jumping ahead into 5G.
“We need still to be a bit sane about utilising 4G more, getting more out of it, getting more connectivity to the unconnected while still doing 5G.”
Dowidar added getting the right services to the right populations is critical. “It’s very important to think about what the customers need. It doesn’t help a customer to provide a technology that the handset today will cost them two years of income to buy,” he said.