5G cost model presented at SAMENA Leaders' Summit. http://www.samenacouncil.org/ls2018/

1. Email: Roberto@samenacouncil.org
http://samenacouncil.org/
Regional 5G Roadmap – Leaders’ Summit
Accelerating 5G Terrestrial Deployment
How Policy can help boost deployment
Roberto Ercole,
Director Public Policy & Regulatory Affairs,
SAMENA

2. CEO Message (Bocar Ba)
“SAMENA Council is in pursuit of broadband investment-friendly policies, futuristic regulations and good
governance, analyzing and encouraging the adoption of digital services, and promoting the need to
collaborate and work together, to mutually address issues that drive business strategies and investment
decisions for ensuring a sustainable future.”
How can we address the investment decisions needed for 5G to prosper?
Spectrum, Standards, and encouraging Investment are key enablers.
What are the challenges to launch
mass market 5G around 2020?

3. • Look at cost of 5G deployment and payback period in certain
countries – simple model and uncertainties;
• Issues that relate to 5G deployment profitability - sensitivities;
• Specifics:
• Spectrum Policy (costs);
• Verticals (revenues);
• Do the 5G investors capture enough of the revenue?
• Other issues such as cross-border data sharing (cloud).
• Ways Forward for cooperation between regulators and industry to
reduce uncertainty and promote early 5G deployment
Promoting 5G Deployment

4. Source : GSMA, Mobile Economy MENA 2017
Percentage of
connections by
technology
In MENA
Where are we in the business cycle for 5G?
5G normally 10 years
after 4G? – 2025?

5. The Problem: How to help 5G in a “Challenging macro-economic
climate”; The scale of the task.
“Difference between cost and extra revenue is the driver
For investment.”
The Challenge!
Average
Revenue
Per sub
Algeria €4
Bahrain €21
Iraq €7
Jordan €6
Kuwait €20
Lebanon €26
Libya €5
Morocco €6
Oman €19
Saudi Arabia €18
Somalia €3
Sudan €3
Tunisia €3
UAE €21
Yemen €3

6. Jordon, 99%
Source: ITU - “ICT Indicators Database” (2017)
(Note! not all country territories shown in full)
Tunisia, 99%
UAE,
100%
Oman
96%
Lower bands such as 700/800 MHz
vital to help promote wide area coverage

7. 45
18
27
30
21
9
39
28
15
19
48
53
59
25
50
€0
€10
€20
€30
€40
€50
€60
€70
Algeria Bahrain Iraq Jordan Kuwait Lebanon Libya Morocco Oman Saudi
Arabia
Somalia Sudan Tunisia UAE Yemen
Months to pay-off 5G investments (assuming 30% ARPU uplift)
arpu € 30% extra rev 5G € months to pay off

8. How long to pay for 5G?
1.4
2.6
2.9
3.2
3.5
4.1
4.4
4.7
5.0
6.5
7.5
8.0
8.3
8.9
9.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Lebanon Oman Bahrain Saudi
Arabia
Kuwait UAE Iraq Morocco Jordan Libya Algeria Somalia Yemen Sudan Tunisia
Years
Years to payback period 5G
assuming 15% uplift in ARPU

9. https://ec.europa.eu/digital-single-market/en/news/5g-deployment-could-bring-millions-jobs-and-billions-euros-benefits-study-finds
Source: EC Study 2016
The costs of 5G deployment will be high and follow closely on from 4G

10. • Service Licence ($?) – that is if existing licences are not technology neutral
• Spectrum Licence ($?)
• Radio access network ($?)
• Backhaul ($?)
• Upgrade of Core Network ($?)
• Upgrade of billing solutions (to accommodate more wholesale players, new services, new
verticals) ($?)
• Cost of sustaining Strategic Partnerships across multiple verticals ($?)
• Cost of re-training personnel to manage 5G deployment ($?)
• Incremental OPEX (5G equipment maintenance, increased site space rental, fibre lease, etc) ($?)
• Investments in platforms to provide applications and service delivery for 5G ($?)
• Investments in locally relevant content to stimulate take-up of services to create monetisation
opportunities for 5G ($?)
What more detail is required?

11. • What might help promote 5G deployment?

12. Spectrum Availability Benchmarking (for commercial mobile)
France @80%
Germany @ 67%
5G will need access to harmonised
spectrum to help drive down
deployment costs. Timing will be key.
Industry suggests a timetable/roadmap
For say 5 years.
1: Mobile network costs can be 70%
driven by base station numbers.
2: Amount and type of spectrum drives
Base station numbers.

13. Source: GSMA – May 17, MENA Tax review report

14. • Better understanding on potential future 5G revenues for
operators from key verticals such as Health and Transport;
• Current spectrum availability/benchmarking, and spectrum
roadmaps for future availability;
• Reduction in costs for deploying base stations (local taxes,
approvals, access to sites etc.);
• Certainty on future 5G band availability and technical conditions
– i.e. 26 GHz; and
• Fees charged for spectrum to account for the need to deliver
higher data rates at lower costs (reduced cost per bit).
Factors that can affect investment decisions

15. Thank you for your attention
Supporting Slides
Our Members

16. WRC-19 and 5G spectrum beyond 2021
▪ WRC-19 will be important for the very high capacity bands to allow 1 million devices per km2 and 20
Gbit/s.
▪ WRC-19 (Egypt) has 11 bands to consider (24.25 to 86 GHz). For SAMENA bands below 30 GHz are
most promising.
▪ Looking at what happened at WRC-15 tells us this could be a difficult process. Especially what
happened with C band not being identified and protected in EMEA (3.6-3.8 GHz). This will make it
harder to deploy 5G in this part of C band.
▪ The key band at the next conference is 24.25 – 27.5 GHz for 5G from an operator perspective and its
ability to use massive mimo. However, the sharing studies are not agreed (again) and radical solutions
have been proposed, that may make the band extremely difficult to use for 5G.
▪ What happens at WRC-19 will be a key factor in getting the largest harmonised bands that can really
exploit mimo and offer the highest capabilities in the longer term (beyond 2021). It is important that
the bands identified are usable and practical.
▪ Failure to do so will lead to fragmentation of bands and hence reduce the benefits of economies of
scale – making it harder to deliver the full benefit of 5G to consumers and economic growth.

17. • How to work out cost of deployment
• EU study suggests a flat cost per subscriber
(€140) in Europe;
• Modify cost per sub figure (€140) based on
relative GDP per capita compared to the EU
average for 70%;
• Assume 30% is “fixed” cost – i.e. €42
imported kit;
• Multiply new cost per subscriber in given
country by population.
cost per user
Algeria € 53.9
Bahrain € 110.6
Iraq € 56.0
Jordan € 54.4
Kuwait € 125.2
Lebanon € 67.1
Libya € 58.6
Morocco € 50.8
Oman € 87.5
Saudi Arabia € 102.9
Somalia € 43.3
Sudan € 47.8
Tunisia € 53.2
UAE € 156.4
Yemen € 45.0

18. cost per user arpu 15% extra years to pay
Algeria € 53.9 € 4.00 € 0.60 7.5
Bahrain € 110.6 € 21.00 € 3.15 2.9
Iraq € 56.0 € 7.00 € 1.05 4.4
Jordan € 54.4 € 6.00 € 0.90 5.0
Kuwait € 125.2 € 20.00 € 3.00 3.5
Lebanon € 67.1 € 26.00 € 3.90 1.4
Libya € 58.6 € 5.00 € 0.75 6.5
Morocco € 50.8 € 6.00 € 0.90 4.7
Oman € 87.5 € 19.00 € 2.85 2.6
Saudi Arabia € 102.9 € 18.00 € 2.70 3.2
Somalia € 43.3 € 3.00 € 0.45 8.0
Sudan € 47.8 € 3.00 € 0.45 8.9
Tunisia € 53.2 € 3.00 € 0.45 9.9
UAE € 156.4 € 21.00 € 3.15 4.1
Yemen € 45.0 € 3.00 € 0.45 8.3