Shift to 5G expected to turbocharge profitability of telcos
But operators need to go through a learning curve on how to fix their charges
The commercial launch of 5G services in the Gulf will be driven not just by competitive reasons but also by telcos’ ongoing digital transformation initiatives. Another factor would be to restrict revenue erosion from traditional services, analysts said.
Ranjit Rajan, associate vicepresident at International Data Corporation (IDC), said regional operators are determined to position themselves as early adopters of the cuttingedge mobile wireless networks alongside the likes of the US, China, Japan, Korea, and Nordic countries. These networks promise significant speed gains, latency, and densification advantages, which will generate a range of transformative applications across every industry — from autonomous vehicles to immersive 4K video and virtual reality, he added.
Turgut Erkul, head of networks evolution and transport solutions at Ericsson, said telcos are not growing as they want to in terms of profitability. “We have passed through a phase where voice has become second to data usage,” Erkul said. “Many countries are making more money from data than voice.”
“Operators are now at a turning point where they will make more money from machine-to-machine communications, which means machines will be making more money than data.”
The opportunities for operators are to get into the digitisation of industries. And even though video consumption is growing, it is not making money for operators, Erkul said, adding that global telcos’ revenue is expected to grow only at 1.5 per cent on an annual basis until 2026.