Revenue from 5G services to be insignificant for late adopters: Moody's

Countries in the Asia-Pacific region, including India, that are late in adopting 5G technology will get insignificant revenue from the services, Moody's Investors Service said in a report on Thursday.

Governments in late adopter markets will have to play a significant role in 5G services roll-out, the rating agency said in the report.

It added that governments have been one of the main drivers in early adopter markets like China, Hong Kong and Malaysia.

"The four pioneer markets, which include (South) Korea and China, will maintain their lead in the adoption of 5G services. Among the four early adopter markets, Hong Kong SAR, China was the first to roll out 5G services, and its 5G adoption rate will be the highest.

"Revenues from 5G services will be insignificant for the late adopter markets of Bangladesh, Indonesia and India," the report added.

Telecom operators in India have said they are ready for 5G services to roll out, and are waiting for the government to allocate radiowaves at a lower price.

The agency's report also said late adopter markets could benefit from concrete timelines for 5G spectrum auctions and government support.

"Governments in the pioneer and early adopter markets have driven 5G momentum. Support typically comes in the form of reasonable spectrum prices and infrastructure planning," the report said.

Operators in Hong Kong and the Philippines commercially launched 5G networks in April 2020 and year-end 2019, respectively, while telecom operators in Singapore and Malaysia are expected to begin commercial roll-out of 5G services by 2021-end, according to the report.

"For the late adopters Bangladesh, India and Indonesia, we do not expect material 5G mobile service revenues over the next 12-18 months," the report said.

It said the late adopters will continue to focus mainly on increasing capacity for 4G networks, with investments in 5G infrastructure mainly for spectrum payments and to keep pace with competition.

Moody's said telecom operators in South Korea and China have had early success in increasing average revenue per user (ARPU) for 5G services.

It added that in late adopter markets, coronavirus has delayed the roll-out of 5G networks, and lockdowns have also caused operational disruptions and delayed the roll-out of 4G networks, which operators are now prioritising. "However, pending spectrum allocation and operators in India are conducting advanced trials on 5G to improve their readiness to launch," the report said.

In India, the government has allocated trial spectrum to Reliance Jio, Bharti Airtel, Vodafone Idea and MTNL to conduct 5G trials, so that they are ready with applications that can work in the country when commercial roll-out begins.

"Lower spectrum prices would be beneficial in Bangladesh and India, where spectrum has been prohibitively expensive. Local operators have been lobbying for more reasonable 5G spectrum prices.

"However, we expect a low likelihood of government subsidies, given the history of high reserve prices set by the governments for spectrum auctions amid ongoing fiscal deficits," the report said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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