5G to reshape global telecoms sector in 2020

The new year is likely to see global mobile penetration rise rapidly with some operators struggling to provide services profitably, while broadband expansion will be slower and fixed lines falling further, according to a report from the Economist Intelligence Unit (EIU).

The Telecoms in 2020 study predicts that the global telecoms sector will thrive in 2020, with global mobile subscriptions reaching three billion by the end of 2020 and growth particularly rapid in Asia, the Middle East and Africa, where mobile penetration will grow by 11% compared with 2019. Global mobile subscription penetration is set to rise from 119 per 100 people in 2019 to 128 per 100 people in 2020, says the report.

Yet while demand for telecoms will continue to increase in 2020, the report says next-generation technologies and the pressures of digital transformation is likely to continue to reshape what it means to be a telecoms operator in 2020. The study predicts that consumers and companies will begin to work out the benefits of potentially disruptive technologies, while policymakers will explore their broader ramifications for society.

This is expected to mean that operators will have to prove they can provide the connectivity required to make a digital future possible, and that they can do so competitively and profitably.

The EIU sees investment in 5G and fibre fixed-line services as a likely top priority for operators in 2020, but they will face challenges. It says roll-out will require a co-ordinated approach between regulators, governments and operators, to ensure spectrum is released on time and at affordable prices – but even if this happens, telecoms companies will find it hard to monetise 5G technology.

Given that, among consumers, only tech-savvy early adopters seem to be willing to pay a premium for 5G, the EIU says operators need to persuade businesses that 5G can revolutionise the way they operate – but it does not see this happening in 2020.

The broadband sector is forecast to see penetration rising slightly, from 18 to 18.5 per 100 people, reflecting the challenge of providing advanced connectivity in markets where costs, pricing and geography are not conducive to investment. And as investment in advanced connectivity continues, IT spending is predicted to rise from just over $2.2tn in 2019 to $2.3tn in 2020.

However, in most regions, the number of fixed lines will continue to decline. The sole bright spot will be fixed broadband subscriber lines, which are set to reach nearly 1.1 billion in 2020, says the report.

In making its predictions, the EIU added the caveat that there were “substantial” risks to its forecasts, including the US-China trade war, Brexit and the backlash against the dominance of Chinese manufacturer Huawei when it comes to vital 5G hardware.

More broadly, it warns that any escalation in trade tensions could disrupt supply chains and prompt a global economic downturn. In that event, is sees the telecoms sector being hit in various ways, including increased costs, a decline in mergers and acquisitions and, perhaps most crucially, a slowdown in 5G roll-out.

“The global telecoms sector can bank on yet more global growth during 2020, but the challenge will be to make that growth profitable,” said Matt Kendall, chief telecoms analyst at the EIU. “Most subscribers are unwilling to pay more for extra telecoms services or faster speeds.

“Operators will try to come up with compelling use cases, but many of them are likely to have to cut costs during 2020 in order to improve their average revenue per user.”