Nigeria Newspapers Online

As had been anticipated, 2024 proved to be anoth­er challenging year for the communications industry.

Declining growth in fixed and mobile broadband network in­vestments coupled with the on­going struggle to monetise new 5G services, and accompanied by the global economic downturn, continued to impact business performance for many telcos, equipment vendors and the wid­er industry.

Work to finalise 3GPP Re­lease-18 during the year brought 5G-Advanced features such as im­proved MIMO and lower energy consumption closer to commer­cial reality, but rollout of the 5G standalone networks which can deliver the technical capabilities required to support 5G-A as well as broader benefits such as Indus­try 4.0, remained sluggish.

In addition, some much-antic­ipated areas of 3GPP Release-17, such as RedCap IoT, had still not progressed beyond trials to significant commercial deploy­ments as the year progressed.

Competition in the rapidly ex­panding satellite sector – notably in the race to extend internet con­nection to rural and underserved regions – became ever fiercer as the year progressed.

Contention for access to mar­kets and frequencies between existing satellite providers and emerging players such as SpaceX-backed Starlink ramped up, while terrestrial providers sought to protect valuable spectrum re­sources.

Meanwhile the industry con­tinued to put its faith in the in­corporation of AI technologies into software and systems as providing the greatest promise for future growth and enhanced revenue generation.

Carryover from 2023’s lack­lustre growth meant that market conditions in the first half were little improved.

By mid-2024, analyst firm Dell’Oro Group was already reporting a 16% year-on-year decline in worldwide telecom equipment revenues for the sec­ond quarter, across broadband access, mobile core networks and radio access networks.

Excess inventory, weaker de­mand in China, challenging 5G comparisons, and elevated un­certainty were among the causes cited by the analyst firm.

European telco fortunes were mixed, with growth in developing markets the main compensating factor for generally static or de­clining returns nearer home.

In Q3 Orange group posted a 1.6% rise in total revenues com­pared to the same period in 2023, to just under N10 billion.

Declining revenues at the group’s European businesses outside of France were offset by stronger growth in Africa and the Middle East, which delivered a 10.5% uplift to N1.82 billion, driv­en by voice, mobile data, fixed broadband, Orange Money and B2B services.

Operators whose focus is more exclusively on emerging markets generally fared better. Bharti Airtel reported revenues up by 12% year-on-year in the second quarter to September, with strong revenue growth in its operations in both India and Africa across mobile, home broadband and business services, with a mid-year increase in tariffs designed to help recoup the billions invest­ed in 5G infrastructure a contrib­utory factor.

Year-on-year operating rev­enues at China Mobile in 1H24 were also up by a modest 3% at RMB546.7 million, despite what Chairman Yang Jie called “vari­ous challenges faced by the com­pany with a complex external environment”.

Equipment vendors’ fortunes followed a similar pattern, being driven largely by regional trends. Ericsson’s 3Q24 network equip­ment sales showed an overall 1% decline with Europe delivering only marginal growth and de­cline across all regions of Asia, as well as Middle East and Africa. Only the US market showed sig­nificant growth.

By contrast, Huawei reported first-half revenues of RMB417.5 billion (US$58.8 billion), up 34.3% in 2023. Although not broken out by business segment, network infrastructure has historically contributed around 50% of total revenues for the company.

Much of the impetus behind 5G-A is coming from China and the Middle East. In April 2024, China Mobile launched what it claims is the world’s first com­mercial 5G-Advanced network ahead of the standard’s expected completion later in the year.

The initial launch covers 100 cities across China, with the aim of expanding coverage to more than 300 cities before the end of 2024.

The operator is collaborating with Ericsson to develop use cases for the technology. China Mobile promised to promote 5G-A by launching over 20 5G-A-com­patible devices during 2024, with a target of at least 20 million 5G-A device users by year end.

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In November, Dubai-based operator du announced a 5G-A Innovation Centre to provide a resource for “anyone associated with the next iteration of 5G” whether within the UAE or out­side.

Analysts’ expectations that the commercialisation of key tech­nologies and features of 3GPP Re­lease-17 such as satellite 5G and reduced capability (RedCap) IoT would significantly improve the prospects for monetisation of 5G may prove accurate in the longer term, although progress during 2024 was less conclusive.

Although already being tri­alled by the likes of Huawei and Ericsson in 2023, progress towards wider commercial de­ployment of RedCap technology has proved slow to materialise.

Among early examples of commercial service launches however, was Philippine telco Dito Telecommunity’s 5G fixed wireless access (FWA) service announced in October, featuring home Wi-Fi powered by 5G Red­Cap technology.

Branded “Dito Home WOWFi” the service leverages the opera­tor’s 5G standalone network and enables speeds of up to 100 Mbps for home users.

In the fixed broadband market, steady progress on fibre broad­band deployments providing 10Gb connectivity have contin­ued through 2024, notably across developing markets, with many hoping for improvements flowing from government funding.

In just one example, the gov­ernment of Nigeria revealed plans in May for the delivery of an additional 90,000 kilometres of fibre optic cable to complement existing infrastructure and in­crease connectivity across the country.

The project is expected to in­crease fibre optic cable capacity from 35,000 kilometres to 125,000 kilometres, giving the country the third-longest terrestrial fibre optic backbone in the continent.

Satellite providers significant­ly ramped up their activities over the course of 2024. With a goal to target areas of poor internet coverage in both developed and emerging markets, investments are at an early stage with service penetration likely to be limited initially.

A combination of the resourc­es of SpaceX owner, Elon Musk and technological leadership that includes a constellation of 6,200 LEO satellites have helped Starlink to scoop up operating li­cences across Africa, Latin Amer­ica and South-East Asia over the course of the year.

Globalstar (in which Apple ac­quired a 20 per cent stake in No­vember 2024), Telesat, Amazon’s Project Kuiper, and Eutelsat One­Web have also been active in the same space.

Concern over the impact of new satellite services on existing terrestrial network providers has ramped up both the rhetoric and the practical measures some are taking to challenge Starlink’s growing dominance of this emerging sector.

One particular area of conten­tion is access to spectrum, where the allocation of new frequencies has in some cases appeared to fa­vour the new satellite providers over incumbent terrestrial oper­ators.

In India, Reliance Jio and Bharti Airtel have challenged a decision by the Indian govern­ment to apportion new satellite frequencies on the basis of allo­cation rather than auction.

Despite the move being in alignment with international principles, the incumbents have argued that the government pol­icy fails to ensure fair competi­tion.

Where telcos should focus their investments in AI technolo­gy during 2024 was a key concern among industry commentators, and whether Gen AI would be pri­marily intended to reduce capital expenditure, enhance network performance, or improve custom­er experience.

Allied to this, evidence of mea­surable benefits from these in­vestments and of a tangible ROI was being increasingly sought during 2024.

The year showed no let-up in the escalating levels of invest­ment in Gen AI, with Deloitte estimating current levels at 10 times (or more) higher than the return.

“Those spending the most might suggest that the risk of un­derinvesting in Gen AI is higher than the risk of overinvesting, but the gap persists and seems to be widening”, cautioned the analyst firm.

The prospects for Gen AI in the coming year will be more fully ad­dressed in the Developing Tele­coms outlook for 2025.