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Telecoms ‘facing major risks’ as industry puts faith in 5G

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The telecoms industry is facing major risks over the next few years as it commits to investment in 5G – with the possible exclusion of one of the major suppliers.

Executives at Mobile World Congress (MWC) this week in Barcelona are showing concern at the amount of investment needed in the new mobile technology, with business cases still unclear – and Huawei facing increasing restrictions in many markets.

Capacity understands the main board of the GSMA discussed the crisis facing Huawei because of accusations that it is providing back doors to the Chinese government. Huawei continues to deny this – most recently by company chairman Guo Ping to Capacity this week.

Huawei has around 30% of the world market for mobile equipment and operators fear that an Ericsson/Nokia duopoly will force prices up and not be able to meet the demand – leading to what one senior telco executive, speaking on condition of anonymity, called “a logistics crisis”.

Tom Loozen, global telecommunications leader at advisory practice EY, told Capacity that the industry faces 10 major risks at the dawn of the 5G era. “The risk landscape is intensifying,” he said, especially as “the overall context is too little growth” – a concern echoed by senior telco executives.

“The question is, how do you get acceptance of new services in these industries,” said Loozen. “Connectivity is a small sliver of the business.”

There are vendors looking at the enterprise mobile business, he said, “but I don’t believe that Huawei, Nokia or Ericsson know how to. There is no salesforc3e in place to serve those companies.”

And engineering companies fail to have enough understanding about the complexities of networks.

EY’s top ten risks are:

  • Ineffective digital growth and diversification strategy;

  • Underestimating changing imperatives in privacy, security and trust;

  • Inability to scale internal digitisation initiatives;

  • Failure to prioritise workforce planning and design;

  • Inability to combat the growing capex burden;

  • Failure to navigate evolving disruption scenarios;

  • Inadequate portfolio management processes;

  • Failure to adapt to changing regulatory frameworks;

  • Insufficient engagement with industry verticals and public sector;

  • Failure to integrate multiple routes to innovation.