LTE – Strategies for MNOs

4G deployment maintains the growth for mobile network investments

IDATE has recently published the study “LTE MNOs Strategies”. This report provides an overview of the latest trends in the emerging LTE market and what reasons MNOs have to migrate to LTE. LTE is gaining momentum and is also the main driver for this year’s growth in mobile network investments. IDATE sticks to its subscriber forecast with 370mn LTE subscribers in 2015.

Frédéric Pujol, Radio Technologies & Spectrum Practice Manager had this to say:

“As of end-2009, investments by MNOs reached EUR93bn displaying a -6 per cent contraction compared to 2008. It is worth noting that, this reduction in mobile CapEx concerned all regions. Some mobile operators are developing new business models based on network-sharing in order to optimise expenditure in the most efficient way”, says Frédéric Pujol, head of the mobile practice at IDATE. “A slight increase (+1 per cent) in mobile CapEx is anticipated for 2010, to be followed by growth of 2.5 per cent in 2011 thanks to 4G deployment.”

Generally speaking, one can say that mobile network CapEx is "under control". 

  • NTT DOCOMO spent JPY 35bn (EUR268mn) in 2010 on installing 1,000 LTE base stations.
  • TeliaSonera expects to spend SEK 500mn (EUR47mn) on LTE for 2010 while its mobile CapEx declined in 2009, reaching a total of SEK 3.9bn (EUR370mn).
  • France Telecom expects to spend some EUR50-100mn (excluding license) in deploying LTE in central areas of two major cities in France. This amount is relatively limited if compared with the EUR642mn spent in 2009 in its mobile infrastructure.

No rise in investment

At present, operators do not envisage any significant rise in investments for LTE – with the exception of Verizon which has opted for an aggressive deployment approach. Indeed, after earlier fulsome investments in 2G and 3G network rollouts and taking into account current economic conditions, operators need to establish priorities in their network expenditures. No wonder, then, that CapEx management is at the heart of every operator’s concerns, especially with regard for LTE build outs.

Migration to LTE can be undertaken smoothly for an operator with the integration, or the re-use, of its existing 3G infrastructure assets reducing up-front investment. Upgrades can be done relatively easily with, in part, a software upgrade and a plug-in card, especially with the use of ‘multi-RAN’ platforms.

For some operators, the addition of small cells and femtocells in particular, can be a method to avoid large CapEx while increasing macro network performance. The network-sharing business model is also a way to bring down CapEx, as seen in Sweden with the Net4Mobility joint venture between Tele2 and Telenor.

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