The adoption of fifth-generation (5G) mobile services will be uneven across the Asia Pacific (APAC) region but the four pioneer markets, which include (South) Korea and China, will maintain their lead in the adoption of 5G services, said a report.
Hong Kong SAR, China is likely to have the highest 5G adoption rate among the region's early adopters that include Malaysia, the Philippines, and Singapore.
Moody's said telecom operators in South Korea and China have had early success in increasing average revenue per user (ARPU) for 5G services.
Meanwhile, near-term revenue from 5G services will be insignificant for the late adopter markets of Bangladesh, India, and Indonesia, given they will focus mainly on increasing 4G network capacity.
"Late adopters may need government support given the coronavirus pandemic is delaying the rollout of 5G services in these markets," it said.
"The rollout of 5G services will fuel revenues for operators in pioneer markets over the next one to two years. Potential margin improvements, however, will take longer because of higher marketing costs and the need to reach a critical mass of 5G subscribers that can cover the fixed costs of 5G infrastructure. Ongoing investments in 5G will weaken leverage and cash flows of early adopters," says Nidhi Dhruv, a Moody's Vice President, and Senior Analyst.
The pandemic will accelerate 5G capital spending by pioneers and early adopters to support consumers' and businesses' increased reliance on technology and the internet. Operators in Hong Kong and the Philippines commercially launched 5G networks in April 2020 and the end of 2019, respectively. Operators in Singapore and Malaysia will begin the commercial rollout of 5G services by the end of 2021.
By contrast, the coronavirus is delaying the rollout of 5G in late adopter markets. These markets could benefit from concrete timelines for 5G spectrum auctions and government support, which has driven 5G momentum in pioneer and early adopter markets. Such support typically comes in the form of reasonable spectrum prices and infrastructure planning.