Telecoms will spend more than 6 billion on 5G spectrum in Europe this year

Madrid, Jan 24 – Telecos will spend in 2021 more than 6,000 million euros in radio spectrum for 5G in the main markets of Europe, according to market estimates, which consider that Telefónica is the second operator that invests the most, 1,093 million euros, behind the Vodafone group.

It is estimated that between 2021 and 2022 telecommunications companies will spend about 13.3 billion euros on radio spectrum for 5G, of which 12.2 billion on new frequencies and 1.2 billion for the renewal of existing ones, according to Bank of America forecasts for the sector in Europe in 2021.

Their analysis matches that of Credit Suisse, which also estimates spectrum investment in Western Europe to be around $ 6 billion for this year.

For 2021, the forecasts are for an expenditure of 7,201 million euros, according to the Bank of America, which contemplates that in 2021 the Vodafone group will be the operator that spends the most in spectrum, 1,515 million euros; followed by Telefónica, 1,093 million, and BT with 904 million.

The Orange group would be in fourth place, if the planned by Orange Belgium is included in its expenditure, which in total would add 534 million euros of expenditure for 2021.

According to these forecasts, dated December, each operator would spend an average of 661 million euros in 2021 and 297 million in 2022.

This analysis considers Belgium, Finland, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom as the main markets in Europe.
Neither Telefónica, nor Orange, nor Vodafone have wanted to make an assessment in this regard when asked by EFE for these estimates.

Among the auctions forecast for 2021 are the one in the United Kingdom, which is scheduled to be attended by Telefónica UK, Vodafone, Hutchison and BT / EE, according to the British sector regulator Ofcom; and that of Sweden, whose 3.5 Ghz and 2.3 Ghz auction opened this week.

The one in Spain is also expected, that of the 700 Mhz band for the first quarter of the year at a starting price of 1,170 million euros, figures above those calculated by the operators, as market sources have informed.

Among the completed auctions are the one in Germany, which involved an investment of 6,600 million euros, almost 70% above expectations, which did not happen, for example, with the French, which amounted to 2,800 million euros, reasonably priced and in line with analyst expectations.

According to Telefónica calculations, 5G will require a direct investment in infrastructure of more than 6,000 million euros in Spain, above the around 5,000 that Europe considers that it will be necessary to allocate in the country for the deployment of this new technology.
For every euro that operators spend in 5G infrastructures, another 3 will be invested in the entire ecosystem that will be generated around this new technology, as recently assessed by the president of Telefónica Spain, Emilio Gayo.

5G WILL NOT BE A SHORT-TERM REVENUE ENGINE

These investments in 5G will not be a revenue engine for telecos in the short term. Both the Bank of America and Credit Suisse consider that operators will see their billing increase in 2021 in the order of 1% or 2%, but more driven by ‘roaming’, as travel resumes after the covid-19 , than for another circumstance.
The repercussions on billing for 5G will be more in the medium and long term. In addition, this technology will serve to consolidate its leadership of the telecos.

However, the long-term impact will be better seen in 2021, considering that the adoption of 5G phones seems to be faster than 4G, according to an Ericsson study, referred to by Credit Suisse, which estimates that in In the fourth year of 5G rollout (between 2022 and 2023) it is estimated that there will be about 1 billion global 5G users, a milestone that was reached in 4G in the sixth year of rollout, in 2015.

This speed is driven by a faster launch of 5G in China and the increased availability of phones.