Despite COVID-19 resulting in revenue pressures from slowing sales and consumer demand for new products, many major carriers say they still have the cash flow to move ahead with 5G deployments, says GlobalData, a leading data and analytics company.
Lynnette Luna, Principal Analyst at GlobalData, comments: “No one can say for sure what impact the COVID-19 pandemic will have on the progress of 5G globally, however, 5G is a strong revenue opportunity for the next decade and any carrier with aggressive plans is loath to slow down.”
Most major carriers have the economic wherewithal to continue with 5G deployments, but outside factors may derail plans – the severity of which will depend on how long stay-at-home orders are in effect. On March 12, Verizon announced a planned increase of its 2020 capital expenditure levels to $17.5-$18.5bn, with much of this increase allocated toward 5G infrastructure spending. Following its merger announcement with Sprint on April 1, T-Mobile announced it will immediately put Sprint’s 2.5GHz spectrum into commission for 5G, with service in the Philadelphia market coming soon.
Luna continues: “Social distancing means that the world economy is effectively put on hold for at least three months and possibly longer. Labor shortages and restrictions on public gatherings translates to the inability for workers to install and activate equipment, although telecom workers are viewed as essential during the pandemic.”
In both the US and Europe, there are reports of local government approvals for 5G installations slowing down amid work-from-home orders and government attention being focused elsewhere. In Europe, several countries have delayed spectrum auctions and GlobalData expects more delays the longer countries stay in lock-down. Europe may now see a delay in getting this additional spectrum, forcing carriers to forge ahead with the spectrum holdings they have now, which offer little differentiation from 4G networks.
Luna concludes: “COVID-19 has impacted all aspects of daily life for consumers, businesses and entire industries around the world. While the wireless telecom industry is not immune to an economic slowdown, it is better insulated than most as its services are an important part of consumers’ lives. That means wireless contracts will be one of the last things cash-strapped consumers will give up.”