Sam Darwish, Chairman and CEO, IHS Towers.
Covid-19 most acutely showed how connectivity is at the heart of the global economy. Societies kept moving because of mobile connectivity; it gave people access to education, health care, employment and essential financial services in an unprecedented period of stagnation.
The demand for smarter, faster and agile mobile connectivity has therefore never been greater. For tower companies and mobile network operators (MNOs), this creates an exciting landscape. The rollout of 5G, the fifth generation of mobile networks, is rapidly opening up new opportunities for businesses and consumers around the world through faster connection speeds, greater capacity and lower latency.
It is estimated that by 2025 global 5G connections surpass 2 billion. While a significant portion of those connections will be in developed markets, we shouldn’t underestimate the tremendous potential of emerging markets with their young demographics, growing populations and tech-savvy consumers.
The rollout of 5G in emerging markets is spread out, but there are specific countries that are booming, driven by consumer demand and supportive regulations. This is particularly relevant in Latin America, especially Brazil. In November 2021, Brazil Raised $8.44 Billion in the 5G spectrum auction, with Claro, Vivo and TIM monopolizing the available 3.7GHz.
It is Brazil’s largest auction to date and proof of the huge opportunity MNOs see in 5G. Brazil, with a population of 213 million people and a 95% mobile mobile subscription, has a wide range of consumers. Moreover, 99.1% of the population of Brazil (paywall) Having 4G coverage and so all eyes are on the next generation of mobile technology. The government’s auction showed how serious the country is about embracing 5G and its potential. The auction was based on an already supportive regulation, reinforced by the reformed Telecommunications Act of 2019 that introduced extended license terms, a secondary spectrum market and unlimited renewal terms.
MNOs in Brazil are already taking advantage of these opportunities. In March, TIM Brasil and Huawei signed an agreement to develop a “5G city” that will be built exclusively on 5G networks and tested in Curitiba, the capital of Parana state. In addition, it is predicted that by July 2025, all cities in Brazil with more than 500,000 inhabitants will have 5G. But making 5G work will require numerous dynamic partners, and unlocking those partnerships will be critical.
Outside of Latin America, the MENA region is expected to significantly benefit from the 5G rollout from 2025. However, Kuwait has positioned itself at the front within this space. With a GDP of $104 billion and a tech-savvy population of 4 million people consuming nearly 50 GB of data/month, MNOs have taken off quickly. As of 2019, all three MNOs in the region (Zain, STC and Ooredoo) offer 5G services. This is in large part due to the Kuwaiti government’s affirmation of 5G as a core component of its economic growth. Under the government Vision 2035, there are plans to build a “smart city” in South Saad Al Abdullah, similar to Brazil’s 5G city, which will house more than 400,000 people and rely heavily on 5G services. From a communication infrastructure point of view, the country has about 6,000 towers, of which 1,424 are owned by IHS Kuwait, and most of the remaining towers are owned by the MNOs.
In a context of emerging markets, with 5G readiness in the pockets, there are clear regions pushing forward. Africa is not yet one of those regions; although 5G is expected to contribute to about 0.4% of Africa’s GDP by 2030. As the CEO of a communications infrastructure provider with substantial presence on the continent, it is a region that excites me immensely for its untapped potential over 5G.
I believe that 5G is inevitable in Africa. Selected markets are already laying the groundwork and all eyes should be on South Africa as an early adopter. According to ICASA, the telecommunications regulator of South Africa, 5G Population Coverage Increased from 0.7% in 2020 to 7.5% in 2021, and GSMA predicts that 90% of the country will have 4G or 5G coverage by 2030. In March, ICASA concluded their multiband auction of 5G mobile spectrum. This was an important step that eased restrictions on spectrum capacity in favor of this sector. It has created opportunities for the entire value chain; it has given MNOs resources and licenses to invest in their networks and given the infrastructure providers the space to deliver updated technology to the tower, including increasing fiber optics.
The road to 5G is an exciting one, and there remains room for innovation, growth and early adopters. Over the next five years, I expect remarkable developments in the 5G journey as its benefits are unlocked for millions of consumers worldwide. I think everyone will have two connections in the future: 5G for mobile and fiber for home. The question is how far are we from that point?