ETNO, the European Telecommunications Network Operators Association, has published a report, prepared in collaboration with Analysis Mason, that asks major technology companies to equip themselves with the equipment needed to develop broadband and 5G networks across Europe. We are seeking investment (Capex) contributions.
This report highlights Europe’s current position in the deployment of 5G Standalone (5G SA) and Radio Access Network (RAN) technologies. Although Europe lags behind Asia in 5G SA and edge cloud technology, it is ahead of North America in certain aspects. According to data from August 2023, only 10 of the 114 5G networks operating in Europe have 5G SA, which is behind Asia’s 17 networks but ahead of North America’s 4. Outperforms the network.
In RAN technology, Europe is actively working on open RAN, with 11 trials and developments by 2023, more than North America but behind Asia and Japan. The report highlights changes in carrier spending patterns, revealing that for the first time in 2023, external cloud and IT providers will attract more investment than in-house services, marking a significant departure from historical trends. did.
The report highlights the challenges facing Europe’s telecommunications sector, highlighting its poor performance in terms of both revenue and investment. Real revenues fell as carriers worked to absorb inflation on behalf of their customers. Average revenue per user (ARPU) in Europe lags behind its global peers, and his ARPU numbers for mobile and fixed broadband in 2022 are significantly lower than the US, South Korea and Japan.
Although telecommunications investment will increase to €59.1 billion in 2022, European operators face challenges in competing with global operators. The report reveals that ETNO members contribute significantly to the sector’s investments, accounting for 67% of the sector’s total capital expenditures.
A significant portion of the increase in capex is primarily due to the fiberization of fixed access networks, such as fiber-to-the-home (FTTH), and continued investment in mobile RAN, particularly in 5G. Almost half (48%) of the total capital expenditure of European operators in 2022 will be in fixed access, of which around 90% will be devoted to his FTTH. Mobile capex accounts for 20-30% and remains evenly distributed, consistent with spectrum acquisition and network evolution.
The report also notes the disconnect between carriers and tech giants’ investments in digital infrastructure, and emphasizes the need for stronger collaboration.
Europe is lagging behind other countries in the world in the field of 5G, reaching 80% of the population in 2023. Mobile downlink speeds and availability in Europe are inferior to those in the United States, South Korea, and China. The report notes that European operators are spending heavily on spectrum auctions for 5G bands, which will reach €26 billion by October 2023.
Despite progress, Europe still faces challenges in delivering gigabit connectivity, lagging behind China, South Korea and the United States. The report notes that while Europe’s FTTH coverage is outpacing its global peers, it highlights gaps in achieving the EU Digital Decade goals.
The European telecommunications industry faces declining return on capital employed (ROCE) and high capital intensity as the sector grapples with challenges such as retail market fragmentation. The net debt/EBITDA ratio of ETNO member companies reached 2.60 in 2022, the highest in recent years, as the industry grapples with rising costs and challenges in generating adequate profits.
In summary, the ETNO report calls for a collaborative effort to address the pressing challenges facing Europe’s telecommunications sector, and calls for big tech to play a role in sharing the burden of capital investment for critical network infrastructure development. I’m looking for.
