• Bad news as ratings firm doesn't expect any revenue catalysts next year
• Hardly surprising given 5G coverage is patchy with no premium price tag
• S&P doesn't expect 5G to have its day in the sun until mid-2020s

Further proof, as if it were needed, that 5G won't live up to a decade of hype any time soon was served up today, as Moody's reiterated its negative outlook for the EMEA telecoms sector for the next 12-18 months.

"Revenue growth is unlikely to materialise," the ratings firm's SVP Carlos Winzer says, "as the anticipated catalysts, namely more benign regulation and the contribution of 5G, are both absent."

In the EU in particular, benign regulation would appear to be well off the agenda for the next few years. In September, Margrethe Vestager was appointed to head up the Commission's digital policy, in addition to winning a second term as competition commissioner. She has no problem hauling the Web giants over the coals, and has established a track record of closely-scrutinising in-market telco M&As.

And then of course there's 5G.

As OpenSignal's latest data highlights, even in South Korea, the world's most advanced 5G market, 5G customers only spend around 20 percent of their time actually connected to a 5G network. The rest of the time, they are connected to LTE.

In addition, we're in the non standalone era of 5G, which to all intents and purposes merely adds better throughput and reliability – particularly towards the cell edge – on top of the underlying 4G infrastructure.

Not only that, but only range-topping flagship handsets are being equipped with 5G chipsets at this point, putting them out of reach for the mass market.

The combination of patchy coverage, an incremental performance increase, and expensive devices means operators can't justify slapping a higher price on 5G service. They may get an opportunity in future, when standalone 5G rollouts are underway, and more of the network has been virtualised, but certainly not in time to affect Moody's outlook.

In a European telecoms sector update this summer, S&P said "current [5G] use cases and compatible devices are sparse, and consumer plan pricing shows little to no 5G premium." As a result, S&P thinks "the real 5G opportunity is mid-decade unless enterprise customers can accelerate the arrival of a 5G 'killer app'."

It isn't just non standalone 5G and strict regulation affecting the rating. Moody's is also worried about competition, which remains fierce (and plays a part in constraining prices, including for 5G), slower-than-expected GDP growth in Europe, and high levels of debt.

"Companies will have limited financial flexibility in 2020 to face the new investment cycle, as some still have high debt levels," Moody's said, adding that "pressure on share prices in the industry suggests the potential for activist investors to enter the sector and seek to change financial policies and strategies."

On the economic front, the EU expects growth in the euro area to slow to 1.2 percent in 2019, from 1.9 percent in 2018. Its 2020 forecast currently stands at growth of 1.4 percent.

"Any further escalation of trade tensions and an increase in policy uncertainty, could prolong the current downturn in global trade and manufacturing and trigger a sharp shift in global risk sentiment and rapid tightening of global financial conditions," warns the European Commission's most recent European Economic Forecast.

Against this economic backdrop, and with no expectation of a meaningful lift in revenue, next year is likely to see telcos work harder on efficiency gains, while promising that a 5G revenue boost could be just around the corner.

"Some companies are exploring asset sales, including network spins, to increase balance sheet flexibility, and aggressive cost-cutting to grow EBITDA through margin improvement," said S&P in its summer update. "We expect incremental growth in ratings headroom will result, but little will come from topline growth."