Friday, 22 November 2019 10:48

S&P does not expect 5G threat to NBN in the short to medium term Featured

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S&P does not expect 5G threat to NBN in the short to medium term Pixabay

Credit ratings agency S&P Global Ratings has said it does not expect 5G fixed wireless broadband networks to replace the NBN in the near-to-medium term, due to heavy capital spending and the fact that some players were stretched financially.

In its global outlook for telecommunications in the coming year, S&P said at the moment, telcos needed to pay high fixed-line-network access charges to the NBN Co, the company building the national broadband network.

This was causing earnings to dip, the ratings firm said.

It said Australian telcos were keen to grow their 5G-based fixed wireless broadband business, so that they could bypass the non-profitable NBN.

Two Australian telcos launched 5G services this year, with Telstra and Singtel Optus, kicking off their networks.

S&P said both companies had been relatively aggressive in the buildouts and had plans to expand the networks over the next 12 months.

But the ratings firm saw 5G wireless broadband gaining, albeit slowly. "Still, over the longer run, we expect technological advances and high mobile network investment to slowly tilt the balance in favour of 5G wireless broadband services," S&P said.

"Although we expect Australian telcos to remain relatively aggressive in their 5G buildouts, 5G capital spending is unlikely to be a large lumpy step-up, given our view of a gradual 5G evolution."

Among Asia-Pacific countries, the brightest outlook was for China, with S&P pointing out that the initial response to 5G had been strong, with nearly 10 million subscribers registering before the launch. All three state-run telcos — China Mobile, China Telecom, and China Unicom — launched 5G services earlier this month.

"We believe China will continue to expand its 5G network aggressively as it plans to extend coverage to all 300 plus cities by the end of 2020, and remains committed to gaining global leadership in
developing 5G technology," S&P said.

"We do not expect the high investments to weigh on the financial metrics of the Chinese incumbents, which remain well-positioned to endure the high capital spending thanks to their strong financial resources, particularly for the largest player China Mobile."

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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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