Europe needs to spend €300 billion more on 5G and fibre – ETNO

Europe needs an additional investment of €300 billion to complete the rollout of 5G networks and Gigabit-capable fixed infrastructure, according to new data.

Advanced connectivity will help Europe create new jobs as part part of its recovery from the Covid-19 pandemic, according to new analysis carried out by Boston Consulting Group (BCG) and published by the European Telecommunications Network Operators Association (ETNO).

That’s hardly a staggering conclusion, given the changes in working pattern experienced across Europe over the past year, but it is interesting nonetheless. The research suggests that Europe could create 2.4 million new jobs over four years through digital transformation, simultaneously boosting economic growth and pushing the green agenda. But – and there’s always a but – such an outcome will require investment, and lots of it.

“This will require a €300 billion effort in terms of telecoms network investment, with additional action required to stimulate demand and digital upskilling,” said ETNO.

That €300 billion forecast figure is split equally between fixed and mobile. BCG estimates that €150 billion “is still needed to achieve a full-5G scenario in Europe,” especially as IoT services ramp up, with an additional €150 billion required to complete the upgrade of the continent’s fixed infrastructure to gigabit speeds, which in many cases means the rollout of fibre, but could also include fixed wireless delivered over 5G.

Naturally, much of the investment burden falls on telcos, but ETNO is calling on governments and policy makers to do their part by, for example, making spectrum available in a timely and cost-effective way, encouraging cooperation to build scale, and promoting demand.

“Investment in European network roll-out must become attractive again and the long-term sustainability of the telecoms sector fostered,” the report, Connectivity & Beyond: How Telcos Can Accelerate a Digital Future for All, reads.

As it stands, this €300 billion investment forecast will not sit well with telcos.

While some of the required investments will have a positive impact on telcos’ return on capital, most will likely be met with scepticism from investors, ETNO admits. The spend is “worth it,” but from an overall economic perspective, rather than from the operator ROI angle. This is particularly true when it comes to fibre deployment, with rollouts to semi-urban and rural areas carrying weak business cases; BCG notes that return on capital employed (ROCE) for fibre is below the cost of capital for large swathes of land area.

“Telcos will be investing for the greater good, but the financial returns for individual companies are not necessarily attractive. This cannot be ignored by policymakers,” the report reads.

Governments in many European countries have rolled out broad initiatives to extend the reach of fibre to uneconomic areas, but there is still much work to do. Policymakers will have to play their part, because persuading telcos to invest billions of euros for the greater good will be a big ask.