Europe’s telecom sector needs urgent innovation and investment needed to secure global leadership, ETNO report says

Europe’s telecom sector finds itself at a pivotal juncture, facing both unprecedented opportunities and significant challenges in the race for global connectivity leadership. According to the latest “State of Digital Communications 2024” report by the European Telecommunications Network Operators’ Association (ETNO), backed by research from Analysys Mason, the continent is at a critical “lead or lose” moment.

The report highlights that while investment in telecoms soared to a record €59.1 billion, facilitating fiber-to-the-home (FTTH) access for 60% of Europeans by last year’s end, the rollout of 5G Standalone (SA) networks lags considerably. With just 10 out of 114 European networks being 5G SA, the region trails behind its Asian counterparts and North America in adopting this cutting-edge technology, which is crucial for advanced applications like manufacturing plant campus networks.

Edge cloud offerings, which are essential for bringing computing power closer to users and thereby reducing latency, are also sparse in Europe. The continent reported only four commercial offerings last year, a stark contrast to the 17 in the Asia-Pacific region and nine in North America. This shortfall underscores the urgency for a robust pro-innovation and pro-investment policy to boost Europe’s connectivity ecosystem.

The report also casts a spotlight on Europe’s performance against the EU’s Digital Decade targets. Despite making good progress in FTTH coverage, the continent is falling short of its ambitious goals for 5G and gigabit coverage. The current 5G coverage stands at 80%, which, while improved from 73% the previous year, still lags behind global leaders like South Korea and the US, both boasting near-complete coverage.

Furthermore, the financial health of Europe’s telecom sector raises alarms, with investment per capita and sector revenues trailing behind those of global peers. The return on capital employed (ROCE) for ETNO members has almost halved from 9.1% in 2017 to 5.8% in 2022, highlighting the growing difficulty for European telecoms to generate adequate returns on investments.

This backdrop of challenges is compounded by the unique fragmentation of Europe’s retail telecom markets, contrasting sharply with the more consolidated markets in the US, China, Japan, and South Korea. As the European Commission prepares to unveil its new “Connectivity package on digital infrastructure,” the call for urgent policy action to bolster the telecom sector and secure Europe’s position in the global connectivity race has never been more pressing.

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