Asia Pacific Pacific Treasury and Finance Thematic Client Series

Corporations of all sizes and industries should be looking at how 5G could affect their business model, with those in Asia Pacific, including mainland China, Korea, Taiwan and Japan often further ahead than their European and North American peers. Companies investing in 5G can expect to increase their telecom-related spending, including making additional capital expenditure to retool their business; however, the benefits of these investments are likely to considerable. 5G is expected to stimulate the next wave of industrial automation. We are already seeing applications across industries such as mining, where applications such as automated guided vehicles and rail management are becoming visible, and ports where 5G applications are being used for container recognition/ tracking crane gantry control etc. We are also seeing 5G technology being integrated into power grids helping the electric power industry optimize the provision of power more intelligently. There will be winners and losers as the benefits of 5G are gradually realized. One key area of potential value is developing the concept of the metaverse (a collective virtual shared space). This is already well-established in internet gaming, with a huge increase in the value of gaming companies over recent years, but other industries are creating new offerings too. In the music industry, one live event can be downloaded many times. You can find out more about 5G in the digital content industry, and solutions to help monetise the opportunities here. In the fashion industry, companies are reinventing their brands for a new generation, such as digital sneakers, and in the arts, there is a growing number of examples of non-fungible tokens (NFTs). In real estate, people no longer need to visit a property, they can see tour it in virtual reality. Healthcare is also set to see substantial innovation, through remote investigations and procedures. These opportunities have really only emerged in the past year or two, but the speed, latency and efficiency of 5G will be a catalyst for further innovation. Investing in 5G and adapting business models to take advantage of its potential is not simply about digital transformation or even digital value creation, but building a digital ecosystem. While the concept of industrial ecosystems is not new, 5G takes this concept to a new, and critical dimension to build capacity across partners. You can find out more about digital ecosystems, and how Citi can help collaboration and exchange of value across ecosystem partners here. … but some are ahead of others 5G could give rise to new and enhanced metaverses 5G must inspire digital ecosystems In revenue terms, telecom operators benefited most from the launch of 2G and 3G technologies. With 4G, the revenues shifted to companies leveraging the technology to deliver services, such as music and media streaming. 5G extends this potential even further. However, revenue models will need to change. In the past, revenues were driven by the number of people connected, usage, distances. With 5G, these criteria are less relevant than the number of devices that are connected, particularly with the growth in M2M and IoT. At a consumer level, this is likely to include wearables and health monitoring devices, but we are also likely to see developments in smart cities, for example, with surveillance systems, smart homes, city-wide networks. With the increase in capacity and low latency that 5G offers, the feasibility and safety of autonomous, connected vehicles increases, as one vehicle can immediately alert vehicles behind them of hazards. Likewise in marine and shipping, automation and safety is increased by using high definition cameras, use of virtual reality devices to monitor ports. The enterprise potential of 5G is vast… 4 5 6 7

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