COVID-19 Pandemic Impact: Telco Cloud Revenue From 5G Core Deployments Will Fall Short of the 2020 Forecasted US$9 Billion by 25%

The industry’s overall shift toward global software-centric networks and operations is taking a hit as a result of the current bleak global economic outlook and COVID-19. Growth stagnation at a macro level is bound to have a causal effect on the demand side (enterprise verticals); sales in the enterprise domain are expected to fuel innovation and diffusion of 5G core rollouts and new telco digital offerings. Without a doubt, telco cloud revenue from 5G core deployments will fall between 20%-30% short of the forecasted US$9 billion in 2020, states global tech market advisory firm, ABI Research. The investment shortfall in modernizing telco networks may well be somewhere in the range of US$2 to US$3 billion in the short term.

“The 5G market was growing faster than anticipated, with 2020 expected be the starting point for 5G Standalone (SA) core commercial deployments in Communications Service Providers’ (CSPs) networks. But that expectation may take a little longer to materialize. That is due, in part, to the fact that COVID-19 will almost certainly derail further trials and testing to verify the processing performance and stability of 5G SA networks. In the short term, the industry may have no choice but to protect existing consumer revenue,” explains Don Alusha, Senior Analyst at ABI Research. “CSPs will accompany that defensive approach with small-scale projects that aim to seek operational efficiencies without necessarily committing to new investments for 5G SA networks and intelligent software.”

There is, by now, widespread agreement that the enterprise market will drive investment in 5G and fuel further growth. “In the long term, the turmoil emanating from COVID-19 will serve as a springboard for the industry to mull over alternative growth options at its disposal. The industry’s positioning in the global production frontier remains anchored to hard-to-duplicate network assets and infrastructure that continue to yield results on the consumer front,” Alusha says. The brief “pause” in production processes of some major economies should give the industry an opportunity to ponder avenues so that it can reinvigorate itself. With 5G SA core, fiber-optic network, and dynamic new software, it is now possible for the industry to usher in a new era of prosperity, innovation, and collaboration for enterprises, communities, and individuals. “But that will not come without challenges, particularly an across-the-board internal organizational retooling,” he adds.

There is no doubt that impending 5G SA core network deployments and cloud-native software give the industry an edge over competing forces. But sooner or later, those at the upper echelons of both the supply and demand side of telecoms will almost certainly realize that they need to preserve the current order of doing business if they are to sustain that edge. “Further prosperity and innovation will stem from new forays that are either built atop that edge in a vertical fashion or leverage new, highly complementary horizontal capabilities,” Alusha recommends.

For a clearer picture of the current and future ramifications of COVID-19 across technologies and verticals, including 5G Core & Edge Networks, download the whitepaper Taking Stock of COVID-19: The Short- and Long-Term Ramifications on Technology and End Markets.