The European Telecommunications Network Operators’ Association (ETNO) today released its Connectivity & Beyond report which highlights the investment needs across Europe for 5G mobile networks, fixed broadband operators, and digital infrastructure, over the next 5 years. Overall, ETNO states that investments of €300bn, by 2025, are necessary to achieve both full 5G deployment and fixed broadband speeds of 1 gigabit per second in Europe.

5G in Europe – €150bn of Investment

European investments in digital infrastructure have brought reliable 4G mobile internet connectivity to 96% of Europe’s population. Currently, these 4G networks offer average download speeds of more than 40 megabits per second.

In terms of 5G roll-out, at least one 5G mobile network, presently reaches 24% of the European population. However, ETNO stipulates that €150bn of investment is still needed to achieve full 5G deployment in Europe.

5G Deployment in Europe – Capital Expenditure Need

5G Deployment In Europe CapEx Need

ETNO breaks down the investment requirements for 5G mobile networks in Europe as follows:

  • Wave-1 (2019 to 2021): €35bn of investment
  • Wave-2 (2022 to 2024): €53bn of investment
  • Wave-3 (2025 to 2027): €57bn of investment
  • Other: €5bn of investment

Overall, mobile operators in Europe will put this €150bn of capital towards a variety of 5G deployment types. Specifically, ETNO includes coverage and capacity enhancements for cities, roads, highways, and railroads.

Digital infrastructure is the physical link that enables these 5G coverage and capacity enhancements in Europe. As such, ETNO forecasts that Europe needs more than 50k new towers in 16 countries by 2023, to support the roll-out of 5G mobile networks. Indeed, these towers will strengthen the roll-out of low- and mid-band 5G spectrum across the continent.

High-Band (Millimeter Wave) Deployments

Notably, high-band (millimeter wave) 5G spectrum deployments are not included in ETNO’s €150bn investment forecast. Indeed, accounting for high-band (millimeter wave) deployments would cost an additional €10.2bn in Wave-2 and €10.2bn in Wave-3.

Specifically, ETNO envisions a 6-to-1 small cell to tower ratio by 2027. In turn, this digital infrastructure will enable high-band (millimeter wave) spectrum deployments, which require significant densification. Therefore, ETNO’s €150bn investment forecast would rise to €170bn, once factoring in the requirements for high-band (millimeter wave) 5G deployments.

5G’s Economic Impact in Europe

By 2025, ETNO projects that 5G can generate €113bn in annual GDP impact and create 2.4 million new direct jobs in Europe.

5G’s Annual GDP Impact in Europe by Industry
5G Europe Annual GDP Impact Industries

ETNO breaks-down 5G’s economic impact into first-order benefits and second-order benefits. Firstly, 5G will lift GDP in the sectors of automotive (€42bn), healthcare (€6bn), transport (€8bn), and utilities (€6bn). Secondly, 5G will add to GDP in the sectors of smart city (€8bn), non-urban (€11bn), smart home (€1bn), and workplace (€31bn).

5G’s Regulatory Roadblocks

ETNO notes that constraints to the pace of digital infrastructure deployment in Europe, by mobile operators, for 5G, take many different forms. For example, in Germany, it takes a minimum of one year to secure the necessary approvals from authorities to build and launch a new cell tower site. Additionally, tower construction is often controversial, particularly at the local level.

Fixed Broadband in Europe – €150bn of Investment

Europe’s telecom operators are rapidly deploying fiber connectivity across much of Europe. Overall, these telecom operators have brought fixed broadband coverage to 84% of households in the European Union, with speeds of 30+ megabits per second.

However, 10% of European households remain without coverage by any fixed broadband network. Additionally, more than 30% of Europe’s households do not have access to speeds of at least 100 megabits per second.

Europe’s Fixed Broadband Targets

ETNO forecasts that €150bn of investment is needed to upgrade fixed broadband infrastructure, to be capable of offering 1 gigabit per second speeds. Specifically, this means replacing legacy copper infrastructure with fiber optic cabling. Notably, as of year-end 2020, only 43% of European households had fiber coverage.

Overall, this €150bn of investment will ensure 50% of European homes will be reached with speeds of 100+ megabits per second by 2025. Additionally, many of these homes will have access to speeds of up to 1 gigabit per second.

Deployments of these fixed broadband upgrades will take the form of fiber-to-the-home (FTTH) or office (FTTX) and 5G fixed wireless access (FWA) services.

Fiber Roll-Out to Semi-Urban and Rural Areas

ETNO notes that the roll-out of fiber to semi-urban and rural areas often comes with weaker business cases. In turn, this means a lower return on capital employed (ROCE) for investors. Specifically, fiber roll-outs that have occurred in the UK, Germany, and Austria in rural and/or less affluent locations have provided inadequate ROCEs.

For example, ROCEs for fiber investments have been below the cost of capital in 20% to 40% of these countries. Indeed, ROCEs for these rural and/or less affluent fiber projects have fallen to -20% or even worse in some areas.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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