Top story of the year in telecom: 5G rollout

Telecom has been a star sector for years, as one of the industries that has developed rapidly in the last couple of decades and has kept up with all the innovation at the global level. In the last five years, the industry has entered a consolidation phase and several mergers have taken place between leading telecommunications companies. In 2023, we will see the development of 5G networks, which will greatly transform the telecom environment.

By Aurel Constantin

The industry is undoubtedly also affected by the problems faced by the economy and society at large. “The local context is now characterised by two major challenges: inflation—which went above 16 percent at the end of 2022, the highest level of the last 20 years, putting pressure on consumer purchasing power—and the rise of energy prices, with all the recent changes affecting both consumers and companies,” says Razvan Bogasiu, Chief Strategy, Transformation, and Wholesale Officer at Orange Romania.

“In our industry specifically, we are operating in a very competitive and dynamic market, with some of the best quality of services and prices for customers worldwide. But telecommunications is a heavy investment infrastructure industry, with funds periodically being allocated to equipment, civil works, and spectrum, so profitability is key for future developments,” Bogasiu explains, adding that supply chains disruptions and the resulting shipping delays have had an impact on the sector.

But even in a complicated year like 2022, the local telco industry managed to reach some important milestones. The 5G auction, the adoption of the European Electronic Communications Code or maintaining one of the best internet speeds in Europe are just a few of last year’s achievements.

5g Rollout

At the end of 2022, the auction for the new spectrum was finalised, with Orange, Vodafone, and RCS&RDS buying several blocks worth a total of EUR 432 million. “In 2023, 5G rollout will accelerate, following the new spectrum allocation through the 2022 auction, and this implies large investments in network development, paving the way to the future. 5G is key for our plans, and through it, Orange is maintaining its commitment to providing the best customer experience. In addition, fibre rollout will continue, improving fixed network coverage and quality, further expanding our broadband and TV capabilities. We will also continue to focus on speeding up digitalization, green energy, and ESG,” says Razvan Bogasiu.

Orange bought the largest number of frequency blocks and will most likely be the biggest investor in 5G infrastructure, followed by Vodafone and RCS&RDS (Digi Mobil). The other big player, Telekom, decided not to buy new spectrum as it is preparing to exit the market.

Investment in 5G and associated services will increase the value of the telecom industry. “The telecommunication industry’s contribution to the GDP is below 10 percent. But considering the growth in the usage of digital services and the development of the ICT/M2M services in the public and private sectors, this share might grow in the future,” Bogasiu notes.

We should see several important developments in telecom in 2023. Besides 5G adoption, there is also a need to develop full support among operators for the Digital Agenda, which will enable widespread access to digital services. There are plans at the government level to expand the national fixed high-speed broadband coverage, especially in rural areas, and that should lead to a growth in data services. “And we should also see better and more complex ICT solutions and the improvement of new technologies like automation and virtualisation, increasing adoption for IoT, M2M, cloud, and AI,” Bogasiu adds. Gartner estimates that worldwide spending on IT products and services will reach USD 4.5 trillion in 2023, up 2.4 percent from 2022. This is down from the previous quarter's growth forecast of 5.1 percent. As Romania tends to follow global trends, we should see a similar increase in IT spending locally.