5G Network: Leading 3 Companies to Invest in Before 2021
Bank of America Merrill Lynch highlights these companies as pioneers in creating the essential equipment driving the advancement of next-generation 5G mobile technology.
In the U.S., the prevalent mobile communication standard, fourth-generation Long Term Evolution (4G LTE), debuted in December 2010 when Verizon Communications (VZ) launched a commercial network across multiple cities. Globally, mobile operators and telecom equipment manufacturers are diligently working on the technology and hardware necessary to bring fifth-generation (5G) mobile networks to life.
Key Insights
- 5G mobile networks are beginning to expand in the U.S., though widespread adoption may take several years.
- Multiple companies are positioning themselves to benefit from this upcoming expansion.
- Ericsson, Nokia, and Qualcomm stand out as the top contenders poised to capitalize on 5G growth.
5G technology promises remarkable enhancements in speed, latency, and capacity, enabling support for a broad range of high-bandwidth applications and innovative technologies. Mobile carriers anticipate delivering 5G download speeds reaching gigabits per second, approximately 50 times faster than current 4G LTE networks.
Beyond sheer speed, one of 5G's most revolutionary aspects is its capability to support tens of billions of connected devices, smart gadgets, and embedded sensors anticipated to emerge as the Internet of Things (IoT) becomes mainstream.
Industry experts, network providers, and equipment makers agree that the initial 5G mobile networks are expected no earlier than 2019, with commercial launches likely in 2020 or beyond. While large-scale 5G deployment remains a few years away, numerous companies are actively engaged in developing and testing 5G gear to play a role in the global rollout of 5G infrastructure.
1. Ericsson (ERIC)
Telefonaktiebolaget LM Ericsson (ERIC), a Swedish telecommunications equipment and services firm valued at $25 billion, is at the forefront of 5G hardware innovation. The company collaborates on field trials and research initiatives with leading mobile operators worldwide, including Verizon, AT&T (T), China Mobile (CHL), and South Korea’s SK Telecom Company Ltd. (SKM), among others.
Ericsson's 5G radio prototype, which enables wireless 5G network access, has been extensively tested in real-world environments across the U.S., South Korea, Japan, and Sweden. These prototypes integrate advanced technologies such as next-generation antennas and receivers, turning the vision of 5G into reality. Ericsson's 5G advancements also contribute to ongoing improvements in its 4G LTE product lineup.
2. Nokia (NOK)
Nokia Corporation (NOK), a Finnish telecommunications and data networking company with a market cap of $18.5 billion, is progressing through advanced testing of new 5G radio access equipment aimed at global deployment by mobile carriers. Nokia collaborates on research and testing projects with Verizon, China Mobile, SK Telecom, Japan’s NTT Docomo Inc. (DCM), and Deutsche Telekom AG (DTEGY), among others.
Nokia anticipates a comprehensive 5G rollout in the coming years. In early 2016, Nokia acquired a 91.8% stake in Alcatel Lucent S.A. (ALU.PA), a French telecom equipment company with its own cutting-edge 5G initiatives, enhancing Nokia’s development capabilities.
3. Qualcomm (QCOM)
Qualcomm Inc. (QCOM) specializes in developing and commercializing wireless communication technologies, including the 3G CDMA and 4G LTE standards. Beyond licensing its intellectual property, Qualcomm designs and manufactures software and integrated circuits (chipsets) used in wireless network infrastructure and mobile devices.
Qualcomm is simultaneously advancing 4G, 5G, and Wi-Fi technologies to support multimode mobile devices capable of seamlessly switching between networks as 5G is gradually introduced. The company plays a pivotal role in shaping 5G industry standards and has pioneered innovations in millimeter wave technology, antenna design, and other critical areas of 5G development. Headquartered in California, Qualcomm boasts a market capitalization of $81 billion.
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