Mid East telcos well-placed for 4G upgrade

Move to LTE priced at $337 million for region’s operators

Tags: 4GAircom InternationalSaudi ArabiaUSAUnited Arab Emirates
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Mid East telcos well-placed for 4G upgrade US operators face a much higher bill of $1.78 billion, while European operators will have to spend $880 million, according to Aircom. (Getty Images)
By  George Bevir Published  September 30, 2009

Mobile operators in the Gulf will have to spend less than their counterparts in the US and Europe to upgrade their networks to fourth generation technology, according to a study released today by a network planning and optimisation firm.

Telecom firms around the world are starting to sign agreements with infrastructure vendors to upgrade their networks to ‘Long Term Evolution' (LTE), an IP-based technology that promises faster data speeds for higher bandwidth services, with Zain Bahrain the first operator in the Middle East to announce such a deal.

According to the report by UK-based firm Aircom, an average operator in the Gulf will have to spend $337 million in capital expenditure, which is considerably less than the bill that operators in the more mature telecom markets of the US and Europe will have to pick up, where legacy equipment will prove more costly to upgrade.

"The Middle East and Africa region is quite well placed to deploy LTE," said Aircom CEO Margaret Rice-Jones. "In one sense, this might sound slightly surprising, but there has been a significant improvement in investment in IP backhaul within the operators of the region.

"Many of operators have the advantage of deploying HSDPA slightly later than their European or US colleagues, and are therefore able to make use of the newest technologies in the core. Also, fibre backbones that Zain and MTN have throughout Africa will be an advantage when they come to put in LTE."

Assuming operators deploy in a similar number of urban conurbations during the first year, Aircom estimates that the cost to Middle East operators will be approximately half that for UK-based operators.

For operators in the US the cost is predicted to be in the region of $1.78 billion, while for European telcos the figures stand at $880 million. Aircom suggests that operators in Asia Pacific region will have to spend the least on upgrading their networks, with a capex requirement of some $232 million.

"One of the basic laws of mobile is that the lower the spectrum you operate in, the fewer sites you need in order to provide the same coverage," Rice-Jones added. "The advantage that the Asia Pacific region operators have is use of 900MHz spectrum versus the higher 2.1GHz spectrum. They will be able to achieve the same coverage with fewer sites, which equals lower costs.

"The fact that [operators in the Middle East and Africa] can re-farm the 2.1GHz spectrum that they already have from 3G and HSDPA and use that for the new technology and the investment they have already made in backhaul will be very advantageous to them."

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