There is growing evidence that huge increases in capital investment might not actually accompany 5G deployment, despite fears and jeers in some quarters. Executives at Swisscom, Three U.K. actually believe capital investment will remain flat as the firms invest in 5G. Flat capex also is the growing expectation at other mobile companies.
But there also is belief that, initially, revenue uplift might also not amount to much.
"The Swiss market is flat and so it is really difficult to add 5G and sell it and personally I think we are having too many discussions around the business case," said Heinz Herren, Swisscom CTO. "I think if your main business case is connectivity there is no question about doing 5G, but I don't think you will see additional ARPU [average revenue per user]."
Some of us would therefore argue that the opt-repeated insistence that Verizon plans to focus on its 5G network, implying Verizon is not in the market for other acquisitions that add platform, app or service revenues, is wrong, and precisely for the reasons Swisscom identifies.
Even if one believes 5G will drive new connectivity revenues, those revenues will not be so substantial. And while 5G fixed wireless will boost Verizon revenues, the upside will likewise be limited.
Nobody seems to be too happy about AT&T’s new debt burdens, as a consequence of the Time Warner acquisition. But that deal boosts revenue immediately by about $31 billion a year. It will take many years before Verizon can grow its IoT and fixed wireless revenues to perhaps $13 billion.
So some of us would argue that Verizon will be spending additionally to boost the platform and application parts of its business. Simply put, new 5G connectivity revenue--as Swisscom also now says--is going to be insufficient to drive the business case for 5G.
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