5G與云：會改變你的生活么

1、Contents HYPERLINK l _bookmark0 Why read this report?1 HYPERLINK l _bookmark2 Facts and figures3 HYPERLINK l _bookmark3 Key HSBC stock calls4 HYPERLINK l _bookmark4 Related research5 HYPERLINK l _bookmark5 Investment summary6 HYPERLINK l _bookmark6 Re-thinking radio10 HYPERLINK l _bookmark7 Rakuten

2、Mobile a test case23 HYPERLINK l _bookmark8 Assessing the costs32 HYPERLINK l _bookmark9 Implications for incumbents42 HYPERLINK l _bookmark10 New entrant plans: Germany HYPERLINK l _bookmark10 and the US53 HYPERLINK l _bookmark11 5G: the hype and the reality67 HYPERLINK l _bookmark12 Valuation, rat

3、ings, risks75 HYPERLINK l _bookmark1 Disclosure appendix81 HYPERLINK l _bookmark1 Disclaimer84Facts and figuresLess than 100Network engineers at Rakuten Mobile c5,000 at SoftBank Corp6 EurosFor 20GB of data on new entrant Iliad Italy. This costs cEUR40 in JapanRakuten went from vendor Requests for P

4、roposal (RFPs) for its virtual Radio Access Network to its first live call in February 2019 in just 8 months. The same process took 6.5 years at Reliance Jio3,000Cloud RAN powered base stations at Rakuten Mobile by March 2020 (33k at full deployment); 25 at Vodafone Turkey4,000Mobile Edge Computing

5、locations will reduce latency and bring content closer to customersUSD5bnTo create a network with coverage similar to that of Sprint in the USFewer than 10Types of hardware at Rakuten; 571 at JioUS start-up AltioStar is critical to Rakutens full virtualisation of the RAN. AltioStar was deemed one of

6、 the top three Open RAN suppliers by Vodafone and Telefonica in October 2018. Rakuten has taken an equity stake in AltioStarJPY 542bnRakutens total capex on 4G/5G over five years vs single-year spending at incumbents of JPY400-580bn1,800Mobile tariffs supported by Telstras legacy systems it has repl

7、aced these with just 20Release 16The iteration of 5G that will bring substantial performance benefits Rakuten plans to launch in June 2020Key HSBC stock callsRakuten 4755 JPCurrent price:JPY1,000Target price:BuyJPY1,400Upside:+40%NTT DoCoMo 9437 JPCurrent price:JPY2,805Target price:ReduceJPY1,910Dow

8、nside:-32%SoftBank Corp 9434 JPCurrent price:JPY1,514Target price:ReduceJPY1,150Downside:-24%Deutsche Tel DTE GRCurrent price:EUR15.08Target price:BuyEUR17.00Upside:+13%DISH DISH USCurrent price:USD35.26Target price:ReduceUSD24.00Downside:-32%Vodafone VOD LNCurrent price:GBp161Target price:BuyGBp190

9、Upside:+18%Expect mobile business to take market share, due to high prices and complexity at incumbents. We assume a launch in early 2020, and c5% subscriber market share 18 months after launch.Cautious forecasts for Internet Services and FinTech upside if competition eases in e-commerce and payment

10、sKey risks to our view are mobile technology delays and increased competitionNeale Anderson* | HYPERLINK mailto:neale.anderson.hk neale.anderson.hk | +852 2996 6716DoCoMo is a pure-play wireless operator in Japan, and thus has a large exposure to potential price pressure from Rakuten. It also hosts

11、the majority of MVNO customers, who are candidates to migrate to Rakuten Mobile.It launched new tariffs in April 2019 to reduce the risk of churn, but so far these have seen slower uptake than expectedKey risks to our view are slower than expected launch by Rakuten, and better than expected growth i

12、n new businessesNeale Anderson* | HYPERLINK mailto:Neale.anderson.hk Neale.anderson.hk | +852 2996 6716SoftBank has a large number of younger smartphone customers, who may be attracted to the Rakuten brand.SoftBank investors are focused on the dividend of JPY85, which may prove difficult to sustain

13、(we estimate an 89% payout ratio in FY March 2020)Key risks are better performance than we forecast at the Yahoo Japan business, and faster growth in new business such as Oyo and WeWork JapanNeale Anderson* | HYPERLINK mailto:neale.anderson.hk neale.anderson.hk | +852 2996 6716Q2 results support our

14、 positive view on DT and TMUS. We believe DT has growth levers in the US via TMUS and a positive medium-term outlook in its domestic business, despite a lot of noiseWhile Unitymedia had been a successful challenger to DT, we do not expect much change on fixed broadband trendsKey risks are a delay in

15、 US merger approvals, and increased competition in GermanyChristian Fangmann* | HYPERLINK mailto:christian.fangmannhsbc.de christian.fangmannhsbc.de | +49 211 910 2002Believe DISH may have left it too late to secure a mobile entry competitors and pricing will be far advanced by the time of launch. D

16、ISH remains under pressure in its core businessCapital raising methodology still uncertain still a lot to do in mobile while core business remains under pressureKey risks to our view are faster mobile rollout than we expect and stabilisation in the core businessSunil Rajgopal | sunil.rajgopal | +1 2

17、12 525 0267Tower plans please the market, and mobile service revenue has been slightly better than expectedProactive balance sheet management and Liberty deal approval are also positivesDownside risks to our view include (1) an increased competition in Germany with new owner of mobile spectrum, (2)

18、rivals applying larger discounts to convergent pricing, (3) spectrum costs exceeding our assessment, (4) adverse FX moves, andadverse regulation.Stephen Howard* | HYPERLINK mailto:stephen.howard stephen.howard | +44 20 7991 6820Note: Priced at close of 13 September 2019*Employed by a non-US affiliat

19、e of HSBC Securities (USA) Inc. and not registered/qualified pursuant to FINRA regulations Source: Company data, Bloomberg, HSBC estimatesRelated researchRecommended reading . HYPERLINK /R/10/tTpLQXZXsu92?docid=1128766 Rakuten Sizing the mobile opportunity 13 Sep 2019 HYPERLINK /R/10/6NccHR2Xsu92?do

20、cid=1128557 Japan telcos Playing the long game Rakuten delays mobile launch 6 Sep 2019 HYPERLINK /R/10/RBrwvwtXsu92?docid=1126313 SoftBank Corp Reduce: Solid 1Q but second will be tougher 6 Aug 2019 HYPERLINK /R/10/qCLkmvvXsu92?docid=1126116 KDDI Reduce: Costs tick up as new entrant launch nears 2 A

21、ug 2019 HYPERLINK /R/10/QfZXJzGXsu92?docid=1125605 NTT DoCoMo Reduce: Slow tariff adoption increases exposure 26 Jul 2019 HYPERLINK /R/10/dlwjhRFXsu92?docid=1115510 Japan telcos Sell signals: Why the newcomer is a real threat 12 Mar 2019 HYPERLINK /R/10/XvtMTT6Xsu92?docid=1125635 US telecoms 4-to-3:

22、 Inspecting known unknowns 29 Jul 2019 HYPERLINK /R/10/jQFmcDnXsu92?docid=1122578 US telecoms 4-to-3: States challenge may not end the deal, adds to overhangs 11 Jun 20195G research HYPERLINK /R/10/DMvnDdhXsu92?docid=1116817 Global TMT Globe-trotting: 5G signals 25 Mar 2019 HYPERLINK /R/10/JJscbwHXs

23、u92?docid=1112428 Asia telcos 2019 outlook: 5G and market structure in focus 29 Jan 2019 HYPERLINK /R/10/TxLmxkkXsu92?docid=1096185 Asia telcos 5G in Asia: Generation gap 30 May 2018 HYPERLINK /R/10/v6tqbcjXsu92?docid=1089640 Global telcos 5G: Whats the use? 29 Mar 2018Recommended viewing . HYPERLIN

24、K /R/20/hd2PV7k Video: Japan TelcosSell signals: why the newcomer is a real threatNeale Anderson, Head of Asia Telecoms Research, discusses our anti-consensus view of Japanese telcos as an industry newcomer threatens to disrupt the market.12 March 2019 HYPERLINK /R/20/wWqT6gd Video: 5GWhats the use?

25、Stephen Howard, Global Head of Telecoms, Media and Technology Equity Research, assesses the main issues surrounding the deployment of 5G.03 April 2018Investment summaryCloud Radio Access Network (Cloud RAN) technology is a potential game-changer in mobile lowering costs and enabling new servicesRaku

26、ten Mobile is the leading exponent of this technology: how it fares with both Cloud RAN and 5G will have industry-wide impactsBuy on Rakuten and Reduce on NTT DoCoMo and SoftBank Corp; Reduce on DISH; Buy rating on Deutsche Telekom and VodafoneOperators need a step-change in cost structure and reven

27、ueThe global mobile industry is at a critical juncture. Demand for mobile services is increasing, with data traffic growing 30-40% or more per year. Yet the connectivity that mobile operators provide has become commoditised, and revenues are flat or declining due to competition and regulation. At th

28、e same time, the cost of delivering data is increasing: spectrum costs continue to rise, networks need to become denser and more wireline infrastructure is required. Much hope is therefore resting on 5G, but so far its difficult to distinguish the hype from the reality. All the more reason we think

29、to look at Rakuten Mobile, which will launch one of the first end-to- end 5G networks in June 2020, following its soft launch of 4G services in October 2019. The success or failure of Rakuten Mobile will provide an indication of what level of cost savings and new revenue growth are possible with 5G.

30、Thinking different the benefits of a software approachAs Marc Andreessen observed in 2011, software is eating the world. Since then the manner in which big tech configures, scales and delivers services has evolved enormously. Then, Netflix was still mailing out DVDs to 14 million customers, having s

31、tarted to offer streaming services in 2007. By June 2019 it had 151m streaming customers globally. Like other web-based businesses it uses the flexibility of cloud computing to allocate resources as required, lowering costs and improving efficiency.The mobile communication industry has been slower t

32、o evolve. As we show in this report, the basic radio access network architecture is little changed from 3G, introduced nearly twenty years ago. Software and hardware is tightly integrated into proprietary formats, tying an operator into an ongoing relationship with a limited number of vendors that h

33、as in turn limited innovation.The advent of Cloud RAN and 5G promises to shake up this relationship, but not without risk to incumbents (both carriers and vendors). The 5G standard potentially enables a mobile operator to have a software personality:Disaggregation of the hardware and software can ma

34、ke scaling and resource allocation much easier, as well as encouraging more vendor competition.A distributed, cloud-based network architecture can make it easier to rapidly deploy new capabilities and services.A virtualised, containerised platform with common APIs could make it faster and cheaper fo

35、r operators and their partners to create, configure and adjust complex services.Computing and processing capability can be resourced and deployed where needed at the edge of the network (providing lower latency and better service) or in the core for process intensive functions that are less time cri

36、tical.We remain cautious on the benefits that 5G could bring the early launches of 5G in Asia have shown that hype can vastly outpace delivery. As we outline in this report, we believe the true benefits of 5G wont become apparent until the first services based on the Release 16 standard are launched

37、 in mid-2020. However, merely migrating to a 5G core network may not be enough to differentiate we think a full mobile edge compute architecture may be needed to showcase the real benefits. This makes Rakuten Mobile important as a 5G test-case.Rakuten Mobile: the first cloud-native networkRakuten ha

38、s made some bold claims in advance of its 2019 launch. The successful test of its network architecture in early February 2019 has given CTO Tareq Amin and his team confidence. Rakuten will soft-launch in October 2019, and we expect a broader commercial launch in 1Q 2020. Incumbents look vulnerable o

39、n price alone (as we set out in our report of12 March 2019, HYPERLINK /R/10/dlwjhRF Sell Signals: why the newcomer is a real threat) we also think Rakuten will be able to launch services that leverage its Mobile Edge Compute network architecture to offer a better customer experience. There is even t

40、he possibility not a given in the current mobile landscape that consumers and enterprises may pay for the privilege.A certain amount of scepticism is warranted here. Rakuten is an IT company with no mobile background, going up against some of the most technology-savvy and well-capitalised operators

41、globally, with a collective c20,000 engineers between them. Its use of 100 e- commerce sales people to secure the sites for its network could reflect either resourcefulness or naivety. Rakuten Mobile claims:A complete disaggregation of hardware and software. Rakuten is running most of its network on

42、 commercial off-the-shelf (COTS) hardware, running X86 servers. In the radio access network components are open and it will be able to swap out and change vendors with ease.A total cost of ownership that is 45% lower for 4G, and 60-80% lower for 5G. These figures are hard to evaluate given different

43、 starting points, although the greenfield cost advantage is undoubtedly compounded by the use of cheaper hardware and the centralising of resources inherent in Cloud RAN. Our conservative inputs suggest a 26% Total Cost of Ownership saving for Cloud RAN compared with a traditional deployment. Rakute

44、ns 5G migration will be one of the easiest globally: installing a new antenna, and running a software upgrade. Its core network is already 5G-ready.First end-to-end virtualisation of the Radio Access Network. The real achievement here is to virtualise and centralise the Distributed Unit (DU), given

45、the very time sensitive network functions that this performs. Rakutens work with AltioStar on this enabled it to reduce its six-year capex budget from JPY600bn to JPY526bn. Most incumbent vendors in 2018 thought that this couldnt be done in such a short time-frame (although it remains to be seen how

46、 the network will perform at scale).First cloud native network, with distributed and scalable capabilities from the edge to the core. Cloud native for Rakuten is end to end many operators have moved certain functions to the cloud, but this in itself may not bring much in the way of performance benef

47、its or cost savings. Particularly interesting is the potential of the 4,000 edge computing centres, which should help reduce latency and enable new services based on slicing (see the March 2018 report 5G: whats the use by Stephen Howard for more on slicing and edge compute).We believe this technolog

48、y can deliver a network that is dramatically cheaper to build and operate than those of its peers this underpins our Reduce call on the incumbent telcos.How Rakuten fares will affect networks and competition elsewhereBeyond the very specific impact on Japanese telco stocks, we think the launch of Ra

49、kuten has broader implications for the industry:Validation of Open RAN and vRAN. The successful launch of an operator at a fraction of the opex and capex of incumbents will validate network architectures like Open RAN. The industry is already moving towards this: Vodafone and Telefonica see huge pot

50、ential in Open RAN the results of their RFI were announced at the Telecom Infra Project (TIP) in October 2018, with AltioStar named as one of the top three vendors.Effect of mobile edge compute architecture. If Rakuten is able to deliver meaningful service benefits using this structure (it claims th

51、is for 4G, in advance of the 5G launch next June) other operators will take note. While others are moving to this network topology, this has been rather incremental and piecemeal so far.5G service launch one of the first to launch with end-to-end Release 16 5G capability. Most other operators plan t

52、o move gradually to 5G a reasonable response given the lack of new revenue streams at the moment. However, Release 16 (in contrast to Release 15) does bring potentially material new benefits Ultra Reliable Low Latency Communications, broader Internet of Things support, network slicing etc. If Rakute

53、n is able to monetise these new capabilities, this could change the dynamics around 5G in Japan and overseas.Other new entrants may replicate the Rakuten Mobile model. Rakuten has already talked of developing its mobile capability as a platform and it has taken an equity stake in AltioStar. Other ne

54、w entrants confirmed and potential are watching closely. The highest profile is DISH, which has expressed interest in replicating its rollout in the US.If Rakuten Mobile is successful, it would likely prompt substantial changes at its competitors. While all operators are cutting costs and digitalisi

55、ng, they are doing this gradually. Incumbent operators like banks have multiple layers of IT systems, and multiple legacy systems. This creates a people-heavy cost structure, and one that is difficult to replace. An idea of how difficult it is to do this can be gauged from Telstra, one of the few op

56、erators to have announced a dramatic change in the way it does business and one prompted by the estimated cAUD3bn reduction in EBITDA as its fixed business is migrated to the National Broadband Network.Among the most eye-catching goals of its T22 program announced in May 2018 is to reduce staff numb

57、ers by 25%, and go from supporting 1,800 mobile tariffs to just 20.Stock implications Reduce on Japanese incumbent telcosJapan believe new entrant Rakuten can undercut incumbents on price. Telecom markets dont like newcomers. They lead to greater competition, higher costs, and lower prices. Investor

58、s usually take note too, especially when they think the threat of disruption is credible. We think this is about to happen in Japan. In our view, the launch of Rakuten Mobile in 2020, the first new entrant in a decade, will disrupt the market. In our report Sell Signals (March 2019), we explained th

59、e risk to Japanese mobile prices with reference to new entrants in other markets particularly Iliad in France and Italy. NTT DoCoMo announced new tariffs in April 2019 that were designed to offer better value to consumers, and reduce the risk from the new entrant. We think this hasnt succeeded, and

60、all three incumbents are exposed. We have Reduce ratings on NTT DoCoMo, KDDI, and SoftBank Corp.US DISH faces considerable challenges in disrupting the market. DISH (DISH US, CP USD36.08, TP USD24, Reduce) a satellite based pay TV operator which holds c13%/ 94 MHz of mobile spectrum in the US has dr