Despite Limited 4G Penetration, Emerging Markets on Par with Rest of the World In 5G Rollouts

Emerging markets have always been behind developed countries in adopting the latest generation mobile networks, with a few exceptions. While it would be safe to assume that emerging markets would also lag in 5G adoption, global tech market advisory firm, ABI Research, finds that emerging countries will have faster than expected 5G subscriber adoption. The Compound Annual Growth Rate (CAGR) of 5G subscriptions in emerging markets is estimated to be 26% between 2020 to 2030, an impressive rate considering the global CAGR of 5G subscriptions is only a slightly higher 28% in the same period.

“The pace of the 5G rollout in emerging markets will be expedited by a combination of regulatory enablement, enabling technologies, such as edge computing and OpenRAN (ORAN), and the broader use cases that 5G brings forward,” explains Miguel Castaneda, Industry Analyst at ABI Research.

The underlying impediments on nationwide 5G deployment in emerging countries are based on the capital-intensive 5G infrastructure and the declining financial health of the emerging markets’ telecommunications sector. These factors are compounded when considering the additional logistical and financial factors for countries such as Vietnam or Thailand that have larger rural populations. Operators in these countries need to exhaust all options that can help alleviate the financial burden of 5G rollout.

Emerging countries should also pay heed to factors that contribute to the growing impetus of 5G rollouts. Changing consumer demographics, the proliferation of smartphone usage, and affordable 5G devices have spurred an exponential increase in emerging countries’ data consumption. Despite having a rural population of around 65%, ABI Research forecasts India’s mobile data traffic, based on 1.2 billion subscribers, to balloon to 160.4 Exabytes by 2025. This figure exceeds the combined mobile data traffic of developed countries like South Korea, United Kingdom, and Germany in the same year, which is 159.7 Exabytes. “Emerging countries that strongly rely on agriculture or manufacturing production would also stand to benefit from the digital transformation capabilities of 5G enterprise,” Castaneda points out.

This surge in data consumption, device affordability, and potential of broader use cases should therefore prompt regulators and operators in adopting proactive strategies in establishing their respective 5G networks. Countries such as India and Vietnam are building their own 5G ecosystem through local telecommunication and software vendors. Developments and innovations in fixed wireless access (FWA) create more financial incentives for 5G rollout into rural regions and helps governments in emerging markets to fulfill their national coverage plans. 5G-enabling technologies such as distributed edge computing, the ORAN initiative, and network slicing have given emerging countries more tools in accelerating the pace of a more digitalized economy. Regulators also play a critical role as they can initiate enabling policies and initiatives to improve the business case of 5G rollout for financially strapped operators in these emerging countries.

“As the COVID-19 pandemic impacts the social fabric and economic activities of our countries, emerging markets are constantly reminded of the importance of a connected world. 5G will address the issue of supply chain resiliency and provide new business models in enterprises. These deployments can serve as a great complementary technology for key national initiatives, such as the Thailand 4.0 Smart City Initiative, India’s Smart City Mission, and the Vision of Indonesia 2045,” Castaneda concludes.

These findings are from ABI Research’s 5G in Emerging Markets application analysis report. This report is part of the company’s 5G & Mobile Network Infrastructure research service, which includes research, data, and Executive Foresights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis on key market trends and factors for a specific technology.