5G Energy Cost vs ARPU

There has been a lot of talk about CAPEX for 5G being a challenge for operators. However, now that 5G deployments are maturing it is becoming apparent that the electricity costs for 5G networks are also significant. Reports indicate 2-3 times higher than multi-generational base stations due to 5G macro sites requiring several new, power-hungry components, including microwave or millimeter wave transceivers, FPGAs, high-power/low-noise amplifiers and integrated MIMO antennas.

When considering electricity costs for an operator today can be 5-6% of OPEX, a countrywide 5G deployment could increase electricity costs significantly.

When we combine this with recent analysis from tefficient which shows that for operators in the majority of countries, an increase of data usage is not increasing ARPU, the problem is plain to see.

In an increasingly 5G world, telcos will face significant growth in their energy bills and whilst data consumption continues to grow and ARPUs continue to decline, operator margins are in jeopardy. The big question is whether the 5G use cases we hear so much about will improve the unit economics enough to offset what is clearly becoming a challenging business case for the consumer segment.

Countries with low cost of electricity such as China, Iran and KSA should have lower OPEX for 5G networks.