5G：低成本才是王道

1、The Credit Suisse Connections Series leverages our exceptional breadth of macro and micro research to deliver incisive cross-sector and cross-border thematic insights for our clients.Research Analysts Colin McCallum, CA852 2101 6514 HYPERLINK mailto:colin.mccallum colin.mccallumKeiichi Yoneshima81 3

2、 4550 9740 HYPERLINK mailto:keiichi.yoneshima keiichi.yoneshimaSunil Tirumalai91 22 6777 3714 HYPERLINK mailto:sunil.tirumalai sunil.tirumalaiEntcho Raykovski61 3 9280 1716 HYPERLINK mailto:entcho.raykovski entcho.raykovskiVarun Ahuja, CFA65 6212 3017 HYPERLINK mailto:varun.ahuja varun.ahujaDanny Ch

3、an60 3 2723 2082 HYPERLINK mailto:danny.chan danny.chan13 February 2019Asia Pacific Equity Research Telecommunication ServicesAsia Telecoms SectorCONNECTIONS SERIES5G: Counting the cost and picking the winnersFigure 1: 5G costs becoming a realitytelco capex forecasts (US$ mn) 120,000100,00080,00060,

4、00040,00020,0000FY17FY18FY19FY20ChinaIndiaIndonesiaMalaysiaThailandAustralia Hong Kong KoreaTaiwanSingaporeJapanSoyun Shin 82 2 3707 3736 HYPERLINK mailto:soyun.shin soyun.shinBilly Lee852 2101 6529 HYPERLINK mailto:billy.lee billy.leeViral Shah91 22 6777 3827 HYPERLINK mailto:viral.shah viral.shahL

5、achlan Brown61 3 9280 1659 HYPERLINK mailto:lachlan.brown lachlan.brownSource:, Credit Suisse estimatesOperators beginning to incur real costs for 5G. Operators in Korea and Australia have already purchased 5G spectrum at auction. In China, on 7 December 2018, the MIIT issued allocations of mid-band

6、 5G spectrum to the three China telcos for nationwide trials, and in Japan allocations are to be awarded in March 2019. Operators are therefore beginning to incur real costs for 5G, in the form of spectrum fees and, in 2019, capex.End use cases still not convincing. There still seems to be no pressi

7、ng need for nationwide 5G coverage for mass market consumers, in the way that video, e-commerce and gaming were facilitated by 4G. This suggests that a gradual rollout using a hotspot approach would be the least damaging strategy for profitability, but this strategy is unlikely to be acceptable in J

8、apan, Korea or China. We expect returns on invested capital (ROIC) to decline in Japan, China, Australia and Hong Kong over FY19-24. Factoring in expected spectrum costs in Hong Kong, we lower our target prices for SmarTone, HKT Trust and HTHK by 9.1%, 1.1% and 3.2%, respectively, to HK$11.15, HK$13

9、.05 and HK$3.05, respectively.Overweight 4G market repair situations. The proximity of real costs (spectrum fees and capex) in contrast with a lack of clarity over the monetization of 5Gleads us to adopt a relatively cautious stance on telcos in China, Australia, Korea and Japan. Our top OUTPERFORM

10、callsnamely DTAC, PT Telkom and SingTelhave exposure to markets that look set to adopt a gradual hotspot approach to 5G rollout, while they enjoy improving 4G competitive dynamics. China Tower Corp (CTC) is likely to prove the winner from 5G over-investment in China.DISCLOSURE APPENDIX AT THE BACK O

11、F THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: CreditSuisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a c

12、onflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Focus charts and tablesFigure 2: Key enablers of 5GSource: Telstra5G investor day, December 2018Spectrum issuedFigure 3: Status of 5

13、G in AsiaMid-band spectrumissuanceTiming/expected timing28GHzspectrum issued?5G soft launch5G commercial launchAustraliaYes2018No20192020ChinaYes2018No20192020KoreaYes2018Yes20192020Auctions/ applications plannedJapanYes2019No20192020Hong KongYes2019No2020/20212021Plans not yet clearSingaporeNo2020N

14、o2020/20212021TaiwanNo2020No2020/20212021IndonesiaNoPost 2020No2020/20212021ThailandNoPost 2020No2020/20212021MalaysiaNoPost 2020No2020/20212021IndiaNoPost 2020NoPost 2021Post 2021Source: Company data, Credit Suisse estimatesFigure 4: 5G spectrum costs in Asia to dateCountryOperatorMid-band spectrum

15、Upfront cost(US$ mn)Price per MHzper pop (US$)High-bandmmWave spectrumUpfront cost(US$ mn)Price per MHzper pop (US$)Total cost as %of market capAustraliaTelstra1x60MHz at 3.6GHz2800.19None-1.0%AustraliaOptus1x100MHz at 3.5GHz*690.03None-n.a.AustraliaVodafone/TPG JV1x60MHz at 3.6GHz1910.13None-n.a.Ch

16、inaChina Mobile1x200MHz at 2.6GHz,-None-0.0%1x100MHz at 4.9GHzChinaUnicom1x100MHz at 3.5GHz-None-0.0%ChinaChina Telecom1x100MHz at 3.5GHz-None-0.0%KoreaSKT1x100MHz at 3.5GHz1,0970.211x800MHz at 28GHz1870.0056.8%KoreaKT1x100MHz at 3.5GHz8710.171x800MHz at 28GHz1870.00515.8%KoreaLGU+1x80MHz at 3.5GHz7

17、290.181x800MHz at 28GHz1870.00515.1%Source: Company data, Credit Suisse estimates Note: : *2x50MHz spectrum bands were purchased for A$95.3m in October 2000 by AKAL Pty Limited (Unwired), later named Vividwireless. Optus acquired Vividwireless for A$230m in February 2012, which owned the aforementio

18、ned 100MHz of spectrum in the 3.5GHz frequency and 98MHz of spectrum in the 4G 2.3GHz frequencyOperators now incurring real costsfor 5GStill no killer apps todrive demand or revenueSpectrum payments incurred, capex commencing in 2019Top picks: DTAC, PT Telkom and SingTel5G: Counting the cost & picki

19、ng the winners5G progressing: Some markets now have spectrum.A standalone version of 5G (5G-S) was finalised by the 3GPP in July 2018, in 3GPP Release 15. The standards are sufficient for vendors to construct end-to-end network elements, as well as preliminary 5G devices. Operators in Korea and Aust

20、ralia have already purchased 5G spectrum at auction. In China, on 7 December 2018, the MIIT issued allocations of mid-band 5G spectrum to the three China telcos for nationwide trials, and in Japan allocations will be awarded in March 2019. Operators are therefore beginning to incur real costs for 5G

21、, in the form of spectrum fees and, in 2019, capex. though use cases are still not overly convincingAfter purchasing or being allocated 5G spectrum resources, operators want to use it to provide additional low cost capacity (low cost on a per GB basis at least), and offload traffic from congested 3G

22、 and 4G networks. Thus capacity provision is likely to be the key initial driver for 5G rollout on the operator side. However, demand pull use cases are lagging. There still seems to be no pressing need for nationwide 5G coverage for mass market consumers, in the way that video, and therefore conten

23、t, e-commerce and gaming were facilitated by stable speeds of over 4Mbps through 4G technology. This suggests that gradual rollout using a hotspot approach would be the least damaging strategy for profitability, but this strategy is unlikely to be acceptable in Japan, Korea or China.Nevertheless, 5G

24、 capex to commence in 2019Indeed, spectrum costs are already now a fact (at least, in Australia and Korea), and capital is being deployed on equipment during 2019. We forecast rising capex-to-sales ratios in Hong Kong, Korea, Japan and China across FY19-21. Given high 4G penetration, and what curren

25、tly looks to be poor prospects for 5G monetisation, we expect returns on invested capital (ROIC) to decline in Japan, China, Australia and Hong Kong across FY19-24. Factoring in expected spectrum costs in Hong Kong, we lower our DCF-based target prices for SmarTone, HKT Trust and HTHK by 9.1%, 1.1%

26、and 3.2%, respectively, to HK$11.15, HK$13.05 and HK$3.05, respectively.Stock calls: Overweight 4G market repair situationsThe proximity of real costs (spectrum fees and capex) in contrast with a lack of clarity over the prospects of monetising 5Gleads us to adopt a relatively cautious stance on tel

27、cos in China, Australia, Korea and Japan. Our top OUTPERFORM callsnamely DTAC, PT Telkom and SingTelhave exposure to markets that look set to adopt a gradual hotspot approach to 5G rollout, while they enjoy improving 4G dynamics. For DTAC, the receipt of 2300MHz spectrum in April 2018, followed by a

28、cquisition of 1800MHz spectrum in August 2018 and 850/900MHz spectrum in October 2018, confirms it as a going concern. Absence of Bt4.0 bn per quarter in concession-related depreciation charges should help DTAC monetise the remaining 4G opportunity, and beat consensus forecasts in FY19. PT Telkom is

29、 the only liquid way to invest in 4G market repair in Indonesia, and is best placed for 5G rollout in terms of both cellular and fibre network resources. While SingTel is exposed to competition in the domestic Singapore market, due to the entry of TPG, this represents a small proportion of SingTels

30、sum-of-the parts. Its associates in Indonesia and Thailand, benefiting from market repair and low 5G capex risk, and much more material drivers of SingTel. We are also less negative on SingTels exposure to the competitive dynamics in India as we look forward, given that Jio has already reached 25.0%

31、 market share by revenue. On a two-year view, it is reasonable to expect Jio to starting behaving more like an incumbentfocused on monetising its existing subscriber baseand less like a new entrant cutting prices to gain scale.Sector valuationsFigure 5: Asia telco comparative multiplesTickerCcyClose

32、 priceRatingTarget Mkt cap price (US$ bn)P/EEV/EBITDAFCF yieldDiv yield19E20E19E20E19E20E19E20EChina Tower788 HKHK$1.67O1.8336.744.929.77.36.73.2%4.0%1.1%2.0%Integrated operatorsPT TelkomTLKM IJRp3,930.00O4,500.0027.617.816.58.37.62.9%6.0%4.4%5.5%China Telecom728 HKHK$4.26N3.9543.912.411.73.23.26.8%

33、4.9%4.0%5.5%China Unicom762 HKHK$9.05N9.9535.317.213.93.43.211.2%8.5%2.9%4.3%Chunghwa2412 TTNT$106.50U90.0026.725.025.110.510.44.7%4.6%4.0%4.0%HTHK215 HKHK$3.11N3.051.936.535.518.417.90.6%0.9%2.1%2.1%KDDI9433 JP2,656O3,30057.911.211.24.74.711.1%11.1%3.4%3.4%KT030200 KSW28,700N32,0006.710.49.52.52.32

34、0.2%18.9%3.5%3.5%Softbank9984 JP10,015O11,70098.89.119.97.37.34.5%9.1%0.4%0.4%PCCW8 HKHK$4.76O5.554.740.533.810.09.710.1%10.8%6.9%7.3%HKT Trust6823 HKHK$11.88O13.0511.517.517.110.910.67.7%8.0%6.0%6.4%PLDTTEL PMP1,216U1,1505.011.911.75.95.7-0.9%-0.2%5.1%6.9%SingTelST SPS$3.05O3.8536.615.313.36.45.26.

35、8%7.4%5.7%5.7%TMT MKRM2.85O3.202.616.115.14.74.44.5%5.3%3.1%3.3%TelstraTLS AUA$3.24N3.1027.417.613.06.35.46.8%9.1%5.2%5.2%True CorpTRUE TBBt5.20U3.455.564.759.96.96.78.6%8.5%0.0%0.0%Link NetLINK IJRp4,380.00O8,350.000.98.77.64.53.88.6%10.3%5.7%7.9%HKBN1310 HKHK$12.04O14.751.528.620.910.57.95.8%6.1%5

36、.7%7.1%Dr Peng600804 CHRmb8.34N9.001.836.419.05.54.75.1%1.3%0.8%1.6%Asia average - integrated14.515.75.75.45.7%6.6%2.8%3.1%NJA - integrated18.716.76.45.96.9%6.9%4.4%5.0%TickerCcyCloseprice RatingTarget Mkt cap price (US$ bn)P/EEV/EBITDAFCF yieldDiv yield19E20E19E20ETickerCcypriceRatingMobile operato

37、rsAISADVANC TBBt181.00O230.0017.116.716.18.08.27.7%8.2%4.2%6.2%AXIATAAXIATA MKRM3.83O4.608.522.019.24.74.69.5%10.0%3.6%4.2%BhartiBHARTI INRs312.20N320.0017.5105.828.38.17.5-5.5%-10.6%0.1%0.4%China Mobile941 HKHK$82.25N82.50214.512.612.63.23.15.8%5.1%4.3%4.4%DiGiDIGI MKRM4.55U3.408.723.724.512.612.82

38、.2%2.2%4.2%4.1%XLEXCL IJRp2,130O3,3001.6110.928.53.73.17.9%14.0%0.8%3.2%FarEasTone4904 TTNT$72.00N77.007.623.623.29.29.16.8%6.3%5.2%5.2%GlobeGLO PMP1,980N2,0005.013.712.85.85.81.6%3.5%4.6%5.2%IDEAIDEA ININR31.15U28.501.6n.m.n.m.11.79.6-98.6%-139.4%0.0%0.0%IndosatISAT IJRp3,520O4,0001.4n.m.n.m.4.54.3

39、-8.7%-6.7%0.0%0.0%LG Uplus032640 KSW15,100N14,8005.913.912.23.73.65.7%5.1%2.6%2.6%MaxisMAXIS MKRM5.70U4.5010.923.123.412.913.13.6%3.6%3.5%3.5%NTT DoCoMo9437 JP2,552N2,70087.412.312.36.06.05.4%5.4%4.3%4.3%SKT017670 KSW261,000O315,00018.79.17.54.84.57.0%5.7%4.2%4.2%SmarTone315 HKHK$9.62O11.151.415.915

40、.36.17.78.0%7.2%4.7%4.9%StarHubSTH SPS$1.91U1.552.416.621.67.37.88.1%6.7%5.2%5.2%TACDTAC TBBt47.75O71.003.616.316.25.14.89.1%9.8%3.1%3.1%Taiwan Mobile3045 TTNT$109.50N110.0012.123.323.29.69.66.1%5.7%5.1%5.1%Asia average - mobile18.514.95.15.04.9%4.2%4.1%4.2%NJA - mobile19.414.94.94.84.8%3.9%4.0%4.2%

41、Asia average - telecoms16.415.35.45.25.3%5.5%3.4%3.6%NJA - telecoms19.115.65.55.35.7%5.1%4.2%4.5%Source: Company data, Credit Suisse estimatesStandalone version of 5G (5G-S) finalisedin July 20185G progressing: Some markets now have spectrum .Standards for standalone (5G-S) already set The 3GPPthe d

42、e-facto standard-setting body for 5Gannounced the first version of the 3GPP 5G standard in December 2017. This standard, termed 5G non-standalone (5G- NS), requires 4G-LTE (both LTE radio and LTE core) to act as an anchor for the 5G network, and therefore 5G-NS acts an as overlay on an existing 4G n

43、etwork.A standalone version of 5G (5G-S) was finalised by the 3GPP in July 2018, in 3GPP Release 15. This release brought a new end-to-end infrastructure, facilitating the ability to deploy 5G independently, without the need for LTE (neither LTE radio nor LTE core) as an anchor to operate. While a f

44、urther step in 5G standardisation comes with 3GPPs Release 16, known as 5G phase 2, currently scheduled for December 2019, the 5G-S standards set in July 2018 are sufficient for vendors to construct end-to-end network elements, as well as preliminary 5G devices. Operators with appropriate licences a

45、nd spectrum resources are now therefore in a position to broaden 5G tests and move towards full commercial launch.So, what actually constitutes 5G? Crucially, both 5G-NS and 5G-S use OFDM (orthogonal frequency division multiplexing) as the radio access waveform, the same radio waveform used in 4G-LT

46、E. Thus, in itself, the improvement in spectral efficiency (bps/Hz) from a 5G RAN (radio access network) versus a 4G RAN is actually substantially lower than the increase seen in previous generation upgrades (4G vs 3G, 3G vs 2G etc).However, several aspects of 5G technology come together to produce

47、higher speeds (circa 10 x 4G levels, at up to 20Gbps), and lower latency (circa 1/30th 4G levels, a 1 millisecond) for users, as well as dramatically higher capacity for operators.Figure 6: Key enablers of 5GSource: Telstra5G investor day, December 2018Wider channel bandwidths are crucialThose aspec

48、ts include beam forming, which directs capacity to a device on the move, multi-user MIMO (Multiple In-Multiple Out), which allows devices to receive multiple allocations of capacity, distributed cores, which allow core network resources to be positioned closer to customers, and network slicing, whic

49、h allows a portion of core and radio network to be dedicated to a specific user or user group.The other critical factor is wider channel bandwidths. Release 16 allows radio carriers up to 1000MHz wide, compared to the 20MHz maximum carrier width of 4G (LTE). Operators are currently achieving high sp

50、eeds (up to 2Gbps) on LTE by aggregating several 10-20MHz channels. The signalling used to support such carrier aggregationcreates inefficiencies. 5G can therefore boost efficiency by using wider single bands to begin with, obviating the need for carrier aggregation and therefore reducing signaling

51、overhead. The key implication of this is that additional spectrum resourceswith much wider carrier bandsare needed. and spectrum has been issued in Korea, China and Australia (with issuance in Japan by end March)Thus, to enjoy the significantly higher speeds and improved performance of 5G (higher ca

52、pacity and lower latency), operators require additional spectrum resources in larger quantities (i.e., in wider carrier allocations, of circa 100MHz per block).Additional spectrum, in wider blocks, is primarily available at higher spectrum bands that were previously unused. Thus, the 3GPP standard-s

53、etters were focusing on standardising the 3.5GHz and mmWave, e.g., (28GHz) bands, (in addition to the sub-2.6GHz bands which are already being used for 2G, 3G and 4G cellular services).Figure 7: Spectrum versus telco technology generationSource: Credit Suisse estimatesThus far in Asia, 5G spectrum a

54、uctions and allocations have primarily focused on the mid- band spectrum, at 2.6GHz through 4.9GHz. Very much as expected, Korea, Japan and China, with their equipment lobbies, regulatory pressure and (in China) government ownership, are at the forefront of 5G trials and spectrum issuance in Asia, t

55、ogether with Australia. These allocations fall broadly in line with leading global markets.Figure 8: 5G spectrum proposals across major countriesSource: Nokia 5G white paper, published in Jan 2018Spectrum already auctioned in Korea and Australia In Korea, 5G spectrum in both mid-band (3.5GHz) and mm

56、Wave (28GHz) was auctioned in June 2018. No new entrants won spectrum and the 3.5GHz auction cleared at just a 7% premium to the reserve price The high-band (28GHz) spectrum was dramatically cheaper, and allocatedin Chinaat around one fortieth of the price per MHz. We note that this spectrum cannot

57、actually be utilised until 2022.In Australia, there was an auction of 125MHz of spectrum suitable for 5G in the 3.6GHz band in November/December 2018, with Telstra and the Vodafone/TPG JV each acquiring 60MHz of spectrum in the metro markets (paying A$386m and A$263m respectively). (Optus was prohib

58、ited from bidding in metro markets given it already had 100MHz of spectrum in that band). The 24.25-27.5 GHz band (the 26GHz band or mmWave) is the next candidate band for allocation to be used for 5G in Australia. ACMA (the Australian Communications Media Authority) has indicated that allocation of

59、 this band is likely in the latter part of 2020.In China, on 7 December 2018, the MIIT issued allocations of mid-band 5G spectrum to the three China telcos for nationwide trials. Specifically, China Telecom and Unicom were each allocated 100MHz of spectrum at 3.5GHz, while China Mobile was allocated

60、 100MHz at 4.9GHz, as well as 100MHz at 2.6GHz. China Mobile was also given approval to use the 60MHz of 2.6GHz spectrum currently allocated for 4G use, taking its total 5G-enabled spectrum allocation at the 2.6GHz band to 160MHz.In Japan, the Ministry of Internal Affairs and Communications (MIC) an