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Global 5G Rollout Entering a New Stage

by Guang Yang | Jun 13, 2022

5G continues expanding in advanced markets

Since the first wave of 5G commercial services was launched, it has been roughly three years. The business performance of leading operators in the advanced markets, such as East Asia, North America, and West Europe, has proven the value of 5G for sustainable growth of mobile operators.   

Mobile service revenue has made a strong recovery in both China and South Korea, the leading 5G markets so far, since the 5G launches. From falling 4-5% per annum in mid-2019, they are now growing 3-4% per annum. As my colleague, Phil Kendall, pointed out in his blog, the leading 5G network performance can help operators outperform the market competition in either Asia, Europe, or the US.

Therefore, we have seen operators continue investing in 5G networks. For example, US operators are increasing their network investments to deploy 5G networks in the C-Band. European operators, such as Vodafone, Deutsche Telekom, Telefonica, etc., are also expanding their 5G coverage and capacity across their footprints. However, a key question to the global mobile industry is if Chinese operators will keep their 5G rollout pace in the coming years, as China has become the largest 5G market in the world. Chinese operators’ 5G strategies will significantly influence the global industry chain.

China expected to keep a fast 5G rollout

On the anniversary of ITU’s World Telecommunication and Information Society Day, May 17th, China Mobile announced it had deployed 850 thousand 5G base stations in China, and the number will reach 1 million by this autumn. China Mobile will achieve the continuous 5G network coverage for all Chinese cities and towns, and also cover some villages and high-demand spots (e.g., tourist attractions) in rural areas. 

MIIT officials also stated that around 600 thousand 5G base stations would be deployed by Chinese operators this year, and the total number of 5G base stations in China will be up to two million by the end of 2022. These announcements indicated that Chinese operators would continue their fast pace for the 5G rollout. Since Chinese operators kicked off the 5G rollout in late 2019, they have been keeping the rollout pace at 600 thousand to 700 thousand base stations per year for three straight years.

According to the 14th Five-Year Plan (2021–2025) of China government, the number of 5G base stations per ten thousand population should be up to 26, which means the number of 5G base stations in China will reach 3.64 million by 2025. Thus, it could be easily estimated that an average of over 500 thousand 5G base stations will be deployed per year from 2023 to 2025. 

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As the COVID-19 epidemic hits China’s economy, China government is implementing policies to stabilize the economy. Infrastructure investment is expected to be an important way to stimulate the macroeconomy. The minister of MIIT has encouraged companies to speed up the building of digital infrastructure, including 5G base stations and fiber-optic networks. Since all Chinese operators are state-owned, they are expected to follow the government’s guidance to extend the 5G investments further.

Therefore, the demand for 5G infrastructure gears in China will still be strong in the next few years. The strong demand will boost the global 5G infrastructure market scale and benefit the entire industry chain. It will also continuously boost the business performance of Chinese vendors who dominate the largest 5G market. 

Emerging markets at the center of the next wave of 5G rollout

In addition to these advanced markets, operators in some emerging countries have also actively rolled out 5G networks. For example, AIS in Thailand has deployed 21 thousand of 5G sites and achieved 78% population coverage by March 2022. The ARPU has been uplifted by 10-15% with the transition from 4G to 5G. The blended data consumption reached 26.6 GB/data sub/month by Q1 2022, a 46% YoY growth. In 2022, AIS will continue expanding 5G network coverage to reach 85% population coverage. The other Thailand operators – DTAC and True Move – have been firmly extending 5G networks as well. DTAC “will prioritize 5G expansion by expanding coverage to all of Thailand’s 77 provinces within the third quarter of 2022.

With spectrum licensing completed, more and more countries with large population bases, such as Brazil, Indonesia, Bangladesh, etc., are joining the 5G journey. Meanwhile, operators in emerging countries still expand 4G networks to support the growing data traffic. For instance, Globe Telecom in the Philippines spent an all-time high P92.8 billion last year to roll out 5G and FTTH networks. In 2022, Globe Telecom will continue to “accelerate the 5G rollout, build new cell sites, upgrade existing sites to 4G/LTE, and ramp up the fiberization.” Indosat Ooredoo Hutchison (IOH) in Indonesia has rolled out 5G networks in five major cities and significantly expanded 4G networks. Its CAPEX was increased in Q1 2022 by 67.7% on a YoY basis, while the cellular revenue and data traffic increased by 55.1% and 98.5%, respectively.

Considering the Philippines, Indonesia, Bangladesh, and Brazil are all the 100+ million population club members, the 5G rollouts in these countries must significantly impact the global 5G development. Cost-effective and extensive capacity solutions would be more welcomed in these developing countries. Infrastructure vendors would need to adjust strategies to meet the requirements of these markets better.

In summary, the global 5G development is entering a new stage. Operators in the advanced markets are still expanding their 5G networks. China will remain a fast-growing 5G market in terms of either customer base or network scale.  China’s aggressive rollout will continue scaling up the global 5G industry. In the meantime, operators in emerging markets, particularly those in large population countries, will play a central role in the next wave of the 5G rollout. This will generate significant influence on the global 5G competition.   

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