Will 5G Mobile Network Infrastructure Spending Rise By 2025?

Per reports from SNS Research, the next-generation 5G network is expected to account for more than 40% of wireless or mobile network infrastructure spending by the end of 2025.

By 2020, 5G networks will account for nearly 5% of the entire investment on wireless network infrastructure. The spending will be allocated to 5G NR (New Radio), NextGen (Next Generation) core and transport (fronthaul/backhaul) networking infrastructure, through 2020-2025.

Per sources, the market will deflate 4% in 2017, primarily due to less spending on standalone macrocell RAN infrastructure. However, investments in Heterogeneous Network or HetNet infrastructure and 5G NR rollouts, beginning in 2019, will increase. The wireless network infrastructure industry is projected to grow at a rate of 2% between 2017-2020 with an expected annual spending of $56 billion by 2020, up from $53 billion in 2017.

In 2016, global 2G, 3G and 4G wireless infrastructure revenues amounted to nearly $56 billion (€47.59 billion).

Notably, mobile operators are keen to shift to C-RAN (Centralized RAN) architecture. By the end of 2020, C-RAN, small cells, DAS and carrier Wi-Fi, along with fronthaul and backhaul segments, will account for more than 45% of total infrastructure spending. With increasing demand for LTE (Long-Term Evolution) and latest updated versions, LTE, LTE-Advanced and LTE-Advanced Pro networks are expected to generate more than $950 billion in service revenues annually by 2020.

New market players are striving to strengthen foothold, while major mobile operators are persistent with transition to virtualized network infrastructure. Notably, carriers are opting for wider range of hardware and technologies to upgrade their networks. The operators are keen to address the increasing mobile traffic demand amidst global economic uncertainties.

5G

5G marks a revolution in the field of communications and technology. It is the next phase of mobile telecommunication standards. According to a research by Ovum, global 5G subscriptions are projected to reach 24 million by 2021, with the Asia-Pacific region having a 40% share and Europe accounting for 10%. With the U.S. telecom industry continuously evolving, companies are engaging in intense competition.

Major Players

In the United States, national telecom operators — Verizon Communications Inc. (NYSE:VZ) , AT&T Inc. (NYSE:T) , T-Mobile US Inc. (NYSE:T) and Sprint Corp. (NYSE:S) — are trying to initiate full-phased 5G deployment from around 2020. Additionally, United States Cellular Corp. (NYSE:S) is also preparing to deploy 5G wireless network.

While AT&T carries a Zacks Rank #4 (Sell), Verizon, Sprint, T-Mobile US and United States Cellular carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recently, Verizon announced plans to launch next-generation 5G wireless residential broadband services in three to five U.S. markets in 2018. AT&T has been conducting 5G network trials in Waco, TX; Kalamazoo, MI; and South Bend, IN, in sync with the company’s plan to offer standard-based mobile 5G services to consumers from late 2018.

The Profit Makers

With increased investments, network equipment providers such as Ericsson (NASDAQ:ERIC) , Qualcomm Inc (NASDAQ:QCOM) and Nokia (HE:NOKIA) Corp (NYSE:NOK) will continue to gain. Recently, Ericsson has been selected by Verizon to provide networking equipment for the latter’s commercial 5G launch. In January 2017, AT&T joined Ericsson and Qualcomm to test the initial 3GPP 5GNR specification in the second half of 2017

The wireless equipment providers continue to make progress in 5G technology and are engaged in multiple trials with different operators across the world.

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