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TELIA - Telia AB News Story

SEK36.5 0.2  0.6%

Last Trade - 16/04/21

Sector
Telecoms
Size
Large Cap
Market Cap £12.81bn
Enterprise Value £21.16bn
Revenue £7.65bn
Position in Universe 57th / 1831

ANALYSIS-Europe plots catch-up in global 5G race to drive COVID-19 recovery

Mon 28th December, 2020 11:47am
* Rollout could be crucial to post-pandemic competitiveness
    * 5G ultimately promises up to 20 times faster internet
speeds 
    * Europe has fallen behind China and U.S. in introducing 5G
    * EU earmarks big chunk of COVID recovery fund to digital
drive
    * Technology could support smart factories, autonomous cars

    By Supantha Mukherjee and Isla Binnie
    STOCKHOLM/MADRID, Dec 28 (Reuters) - 2021 could be a
do-or-die year for Europe's efforts to catch up with China and
the United States in rolling out super-fast
fifth-generation (5G) telecoms networks. 
    The mission to introduce the technology, which ultimately
promises internet speeds up to 20 times faster than today, could
be crucial to how competitively the continent emerges from the
economic ruins of the COVID-19 pandemic. 
    Mindful of this, the European Union is funnelling a fifth of
its 750-billion-euro ($914 billion) recovery fund to improve
countries' digital capabilities.
    European mobile operators have long been reluctant to start
investing in 5G networks, which could support smart factories
and self-driving cars, because of a lack of political clarity
about whether they must accede to U.S. demands to exclude
leading equipment supplier Huawei and other Chinese vendors. 
    But encouraged by the EU financial commitment to the
technology in this area, at a time when the U.S. administration
is changing, and fearful of falling further behind globally, the
industry is preparing to plough ahead in 2021. 
    "Europe is, unfortunately, behind," Pekka Lundmark, chief
executive of Finnish network equipment maker Nokia, told
Reuters. But the rollout "is accelerating already and in 2021 I
think it will gather more speed in most countries".    
    Swedish equipment maker Ericsson forecasts Europe's 5G
coverage should grow from around 1% of mobile subscriptions
across the continent in 2020, to 55% in western countries and
27% in central and eastern states over the next five years,
underpinning a longed-for economic recovery.
    Yet it is the mobile operators who must pay companies like
Ericsson, Nokia and Huawei billions of dollars for the 5G
equipment.
    The EU agreed its rescue package in July, and companies
started drawing up digital plans.  urn:newsml:reuters.com:*:nL5N2ES0BQ
    "We spent the whole summer since the announcement working to
set out tangible projects," said Jose Maria Alvarez-Pallete, CEO
of Spanish operator Telefonica. 
    A European Commission spokeswoman said the first payments
could be made in the summer of 2021. 
    Among various digital projects, Telefonica calculates the
funds could help cover all of Spain with
fast fibre-optic Internet and extend standalone 5G - capable of
giving the highest performance - to around 85% of the country by
2025. 
    
    GEOPOLITICAL GRAPPLE
    While an individual consumer can use 5G for making calls and
browsing the internet, the technology's main benefit lies
in creating new businesses, automating factories and running
critical infrastructures like power grids.  
    Global 5G mobile subscriptions are expected to reach 220
million by the end of this year, with China accounting for
almost 80% of the total, Ericsson said in a report last month.
North America is expected to have 4%.  urn:newsml:reuters.com:*:nL8N2IB2DZ
    "As with 4G, first movers advantage is huge and countries
rolling out 5G early will see most of the innovation," an
Ericsson spokeswoman said. 
    "Unless Europe moves quickly, it risks lost growth and
weakening industrial competitiveness in manufacturing and
logistics that could cost billions of euros in new wealth."  
    Geopolitics remains a major risk, however.
    Pressure from the United States on its allies to shun
Huawei's equipment from its networks is unlikely to
disappear. The United States accuses Huawei of facilitating
Chinese spying, allegations denied by the company and Beijing.
    U.S. President-elect Joe Biden, however, may be more open
than his predecessor to engaging in talks, reducing operators'
worries that sudden policy changes could mean ripping out
billions of dollars worth of existing 4G equipment.  
    Telecom operators had been planning to use their existing 4G
infrastructure as the cheapest and fastest way to start the
upgrade to 5G, which will be able to transmit data as much as 20
times faster than current networks.
    But nearly half of this existing hardware was made Huawei,
forcing operators to look elsewhere for suppliers.
    Nokia and Ericsson have profited handsomely from this shift,
winning deals from former Huawei customers, some of whom are
discussing contracts with Samsung, a new entrant to the European
market.  urn:newsml:reuters.com:*:nL1N2IP396  urn:newsml:reuters.com:*:nL8N2IN1RM  urn:newsml:reuters.com:*:nL8N2HB1TF  urn:newsml:reuters.com:*:nL8N2IW2BJ
 urn:newsml:reuters.com:*:nL8N2H00YL  urn:newsml:reuters.com:*:nL8N2GQ4I7  urn:newsml:reuters.com:*:nL1N2IG0MK  urn:newsml:reuters.com:*:nL8N2J22KR  urn:newsml:reuters.com:*:nL8N28Q532
    Huawei acknowledged the quandary facing clients who have had
to navigate the U.S.-China dispute.  
    "You can't make seven to 10-year investment decisions unless
you know that those investments are protected for that
period," said Kenneth Fredriksen, Huawei's executive vice
president, Central East Europe and Nordic Region. 
    
    ANYONE GOT SIGNAL?
    The delay in auctioning of 5G spectrum – airwaves necessary
for operators to start offering commercial 5G – has been one of
the main obstacles to a rollout. Operators were disappointed
this year when planned auctions fell by the wayside as
governments focused on battling the pandemic.
    Swedish operator Telia's technology chief Stefan Javerbring 
told Reuters the delay in spectrum allocation had been "the
major stumbling block" in the Nordic nations and further afield.
    In encouraging news, Germany, Europe's biggest economy, says
it will present draft rules for auctions in January, and Spain
plans to put spectrum on the block before the end of February. 
    Several countries are also making progress with legislation
to enact the European Union's so-called 5G toolbox, a series of
recommendations aimed at cutting costs and red tape, giving
access to 5G radio spectrum and smoothing cross-border
coordination for radio spectrum for 5G services. 
    "We are already behind in deployment of public 5G networks,
that is a fact," Telia's Javerbring added. "Now we must do
whatever we can to catch up." 
    ($1 = 0.8207 euros) 

 (Additional reporting by Foo Yun Chee in Brussels; Editing by
Pravin Char)
 ((isla.binnie@thomsonreuters.com; +39 06 8522 4392; Reuters
Messaging: isla.binnie.thomsonreuters.com@reuters.net))
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