Monday, 26 October 2020 10:03

Mobile subscriptions set to recover in 2021, says Economist Intelligence Unit Featured

Mobile subscriptions set to recover in 2021, says Economist Intelligence Unit Image by Free-Photos from Pixabay

Mobile subscriptions will recover by 3.4% in 2021 from a drop of a little more than 2% in 2020, the Economist Intelligence Unit has predicted in a new report, adding that the strongest growth would be seen in Asia and the Middle East.

In the special report, titled Industries in 2021: a slow, painful recovery, the EIU also said, however, there were major risks to the sector, including the US-China technology stoush, which would complicate the 5G rollout and increase operators' costs.

It predicted that consumer 5G would not take off in 2021, with the business sector offering much more potential..

"On a regional basis, Asia and the Middle East will see strong recoveries in mobile subscription growth, from falls of around 3% in 2020 to growth of 4.7% and 4% respectively in 2021," the report said.

"However, the ongoing US-China trade dispute, centred around technological primacy, could hit operator balance sheets. Chinese component manufacturers, such as Huawei, ZTE and SMIC, have
been hit with punitive trade restrictions, which could force some operators to shift suppliers, incurring considerable costs and delaying 5G rollout plans in 2021."

The cloud sector was seen as faring better. Google, Amazon and Microsoft all saw double-digit rises in revenue in the first half of 2020 and further increases were seen in 2021, with data centre firms also benefitting.

The report said in the case of 5G, there would be four key trends next year. Investment in the technology would force some firms to restructure drives and tower asset sales.

"Telecoms infrastructure companies will also be looking out for new commercial opportunities, such as fibre to the tower and mobile-edge computing, which will enable operators to improve network capacity as demand increases alongside the launch of 5G services. Merger and acquisition activity will also intensify in 2021 as companies set out to deliver bundled services," it added.

A second trend was that governments would seek to provide support for increasing digital access.

"Although operators justify high tariffs on account of high demand for data and its impact on network performance, governments could offer assistance through spectrum concessions," the report said.

"Spectrum fee payment extensions and infrastructure sharing incentives could also be on the cards, as is the case in some EU markets."

A third trend was that digitisation would offer new opportunities, such as in e-commerce and online shopping. "Gaming has also surged since March, with mobile gaming faring particularly well
as console and PC gaming declines," the report said.

"Within mobile gaming, cloud gaming will show particular promise. The recent launch of cloud subscription platforms from players such as Microsoft could help to drive cloud gaming revenue to US$4 billion (A$5.6 billion) in 2021."

However the trade spats and international spats would continue to be a source of disruption, the report said.

"Thanks to US sanctions blocking its access to clients and supplies, Huawei now finds itself cut off from parts of the global technology supply chain, putting its survival in doubt. While the US clamps down on other Chinese tech firms, including SMIC, TikTok and WeChat, China will push for greater self-sufficiency.

"However, this could take years to reach fruition. In 2021 the risks are high that an escalating technology spat will split global tech standards and delay the rollout of 5G."

Matt Kendall, principal analyst for telecoms and technology at The Economist Intelligence Unit, said: "The telecoms and technology sector will stage a recovery in 2021, but with so much uncertainty around, operators will have to prioritise investment that supports the increasing demand for data and protects network performance.

"Although governments and companies are keen to roll out 5G, they will have to make some tough choices in 2021 given the problems surrounding Huawei."

The full report can be downloaded here.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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