Vendors Ready Themselves for 5G Capex Influx

Simon Sherrington
Heavy Lifting Analyst Notes
Simon Sherrington
12/24/2018

Auctions of 5G-suitable spectrum have generated about $9 billion (and counting) for governments in the last three months of the year alone. Governments are hoping to see billions of dollars more spent on spectrum in 2019, and again in 2020 and 2021, as they free up spectrum for the provision of 5G services.

Meanwhile vendors are waiting on a different bounty -- the many billions of dollars operators worldwide will need to spend to realize their 5G ambitions.

Vendors have suffered a lean period while operators have waited on 5G specifications, equipment readiness and availability of spectrum for service launches. The non-standalone specifications are now (mostly) in place, equipment has been trialed and tested, spectrum is being opened up and commercial considerations are now kicking in.

Operators are quickly starting to announce deployments/soft launches and actual launches for 5G FWA and 5G mobile services. 5G has so far been deployed only within limited geographic pockets, but coverage areas are expanding quickly. 5G is expected to be available in dozens of countries by the end of 2019, and countries are starting to impose coverage obligations in auctions of spectrum suitable for 5G deployments to ensure swift installation of equipment in urban areas and along transport corridors.

And while device availability remains very constrained (5G smartphones are not expected until next year, and 5G routers remain very limited in terms of numbers of different models, and volumes of each model actually available for users), operators are working hard to ensure they are ready for widespread service introduction when the device bottleneck is cleared.

This requires expenditure on a host of network assets: base station infrastructure, core network software and systems, transport infrastructure and -- to make the best of new millimeter wave spectrum bands -- millions of new macro and microcell sites.

Operators are expected to invest over $200 billion in capex on their 5G networks between 2018 and the end of 2023, and much more beyond that. Developed markets such as the USA and South Korea are taking the early lead regarding 5G rollout and service launch, but it will be China that comes to dominate capital expenditure within five years.

Heavy Reading's latest report, Mobile Operator 5G Capex Forecasts: 2018-2023, seeks to provide insight into how much might be spent, and where and when. It provides estimates and forecasts 5G capex by mobile operators (including investments made by those mobile operators in the fixed transport infrastructure to serve those networks), as well as breakdowns of investment by region, and by network segment (RAN, transport, core and civils). The estimates are underpinned by forecasts for 5G subscribers and 5G macro and microcell sites.

— Simon Sherrington, Contributing Analyst, Heavy Reading

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