ALL POSTS

June 2021 in telecoms: what can’t you miss

Curated: GSMA Intelligence takes on Smart City developments and Telco tower assets

This year, June is a notable month for the telecoms and tech industry because it’s ringing MWC in my ears. I am clinging to my excitement as the ecosystem comes together later this month to learn about, and experience, the announcements/demos/launches that will shape the future of the industry. Of course, the event is Hybrid this year; that means you can take in all the updates from the industry in real-time from the comfort of your office/living room/bedroom…wherever you’ve gotten used to working from.

The theme of MWC21 is “Connected Impact”, and as we scan through our News Feed from the last few weeks, that this is corroborated in the business strategies, industry partnerships, and other announcements from ecosystem players. In this edition of CURATED, based on the recent news, the two topics we selected to take a deeper look at are Smart city developments and operator Tower monetisation efforts. As always, we want to highlight the news items that might not have gotten a lot of attention, and call out the topics they signal – and how they could play an important role in shaping the future of industry.

5G: Critical piece of the Smart City puzzle?

Do you know?

Global smart city connections are expected to experience a massive increase from 307 million in 2020, reaching 837 million by 2025 (see chart 1). Cities and countries have been focused on Smart city opportunities for years, but the market has, generally, developed only in selected areas (Smart Meters, Smart lighting), leaving broader smart city ambitions unrealised.

So, will 5G change things?

There is no dearth of narrative on how the ability of 5G to connect millions of devices per square km, the ultra-low latency, and high throughput creates an optimal canvas to paint the smart city landscape. BUT, what also differentiates 5G, and make it a key enabler, is the new virtual and cloud native architecture of 5G and its confluence with technologies like AI, cloud, and edge. The cherry on the cake is 3GPP including licensed LPWA technologies, the key tech for IoT, as part of 5G specifications.  

With 5G now available from 168 operators in 68 countries (mobile+FWA) already, telcos/vendors/software providers are making inroads by forging partnerships and announcing their plans. In few such recent developments:

• June 15^th – TIM partners with Enel and Leonardo for smart cities project
• June 2^nd – NOS launches Smart City project in Albufeira
• June 2^nd – Qualcomm to test C-V2X in Georgia Smart City
• May 31^st – HKT teams up with start-ups to accelerate smart city development
• May 27^th – Sony plans to conduct AI based smart city trials in Rome in June 2021
• May 24^th – O2 to enable 5G based smart tram project in Pilsen
• May 21^st – NT, Mavenir, 5GCT and Cisco collaborate to launch first 5G Open RAN Smart City in Thailand

So what?

5G has the potential to unlock an array of opportunities for the ecosystem players in the smart city space. It is evident from the flux of announcements – highlighting the recent momentum gained – that telcos and other ecosystem players have started venturing into this space to capitalise on the existing opportunities.

But to make the most of it, they will also need to be mindful of the challenges (funding challenges, lack of interoperability between solutions from different vendors, who will take the E2E ownership) that can impede the progress. There is no unanimous solution to all the challenges, but as always, the “timing of involvement” is key. Government/Municipalities will be at the front and centre in the Smart city development, however, it is important for the ecosystem players to get involved from the planning stage. Collaborating early can help unveil business models that allow for cost and benefit sharing alongside the allocated budgets from the government. Coming together at the planning stage also ensures creation of interoperable solutions and open platforms.

Ultimately, the early involvement can help to lessen the impact of these challenges, and creates an opportunity to maximise on the potential benefits.

Tower Monetisation: Moving from controlling to hiving off tower assets

Do you know?

Tower monetisation, in different forms, is becoming a mainstream financing option for Telcos. There is a clear shift in business models from controlling infrastructure assets, to co-sharing, and evolving into sale and leaseback models.

Why? With heavy debt burdens, and increased CAPEX levels to support the deployment of next-generation tech, operators need to find money somewhere and tower monetisation comes as a viable option.

The ongoing trend of monetising tower assets via sale option is also noted in the announcements from operators in the last few weeks.

• June 2^nd – Cellnex acquires 3,150 T-Mobile masts in Netherlands
• June 2^nd – Airtel to offload its tower assets in Tanzania
• June 1^st – Telefonica completes sale of Telxius tower business in Europe to ATC
• May 17^th – MTN receives 20 expressions of interest for its telecom towers

So what?

The new model of tower assets (sale and leaseback agreements) poses a win-win situation for both operators and towercos. There are clear benefits for the telecom operators in divesting stakes from their tower arms. The funds unlocked can be used to reduce debt and make investments in new infrastructure, helps to maintain focus on their core business, and also drive opex efficiencies. From the lens of towercos also, the business model works as they earn revenues from multiple tenants on the same infrastructure, and this model allows for the scalability and flexibility required to build next generation infrastructure.

Where towercos are competing for a bigger slice of infra assets with all these acquisitions, they need to remember that while scale is important, so are the new features and innovations (like edge and cloud). To remain competitive in the long term, they should allocate part of their investments to create future-ready infrastructure that can also support new generation technologies and features, like AI, Edge, cloud.

Finally, do you know that…

All of the above analysis is based on news curated by our team of analysts, and taken from our Industry Updates feed. Visit our feed today for more of the news shaping the mobile industry of tomorrow. It comes without interference!

By Radhika Gupta, Head of Data Acquisition at GSMA Intelligence