5G Connections Expected to Top 1B in 2022 & Surpass 2B by 2025

5G Rollout Continues to Gain Unprecedented Momentum

It’s been three years since AT&T Inc. (NYSE:T), T-Mobile US Inc (NASDAQ:TMUS), and Verizon Communications Inc. (NYSE:VZ) first rolled out their 5G services in the U.S.

There was plenty of excitement surrounding the rollout, with analysts saying it would transform the way we communicate, operate businesses, and live in ways we have yet to imagine.

5G technology has been touted as being 10 times faster, supporting 10,000 times more network traffic, and being able to handle 100 times more devices than 4G technology. It can do all of this with one-fiftieth the latency and with zero perceived downtime.

The benefits of 5G, however, have yet to be fully realized. This has caused many to suggest that the rollout of 5G has been a bust, or, as Bloomberg recently called it, “a $100 Billion Whiff.” (Source: “5G Has Been a $100 Billion Whiff So Far,” Bloomberg, March 3, 2022.)

Telecom companies and other 5G-related companies have yet to report massive revenues from their 5G products and services, but that’s to be expected to some degree—at least in the early days of the technology.

2020 was supposed to be the year that 5G experienced massive growth, but because of the COVID-19 pandemic and the subsequent shuttering of the global economy, it was difficult to acquire and deploy 5G equipment.

Keep in mind that 5G networks require as much as 100 times the equipment that 4G networks do. This includes base stations, small cells, relays, and repeaters attached to lampposts, traffic lights, rooftops, exterior walls, etc.

Industry experts say it could take up to a decade to complete the 5G rollout and realize the promised benefits from the Internet of Things (IoT), telemedicine, automated driving, artificial intelligence (AI), augmented reality (AR), machine learning, and the metaverse. (Source: “5G — What You Need to Know,” Medium, February 17, 2020.)

Despite all of the economic headwinds during the COVID-19 pandemic, demand for 5G has been high. With millions of people under quarantine orders and working remotely, the demand for faster data speeds and increased network support has been huge.

With the pandemic mostly in the rearview mirror, 5G technology is expected to gain further momentum over the next few years. In addition to being launched in North America, Europe, and Asia, 5G services have recently been launched in Latin America and Sub-Saharan Africa, meaning 5G technology is now available in every region of the world.

5G connections are expected to top one billion in 2022 and two billion by 2025. By the middle of the decade, more than 75% of mobile phones in advanced markets will have switched to 5G and approximately 40% of the global population will live within reach of a 5G network. (Source: “The Mobile Economy 2022,” GSM Association, last accessed March 8, 2022.)

Fueling the adoption of 5G technology is the consumer-led economic recovery, rising 5G handset sales, high usage of video streaming services, growth of 5G network infrastructure and coverage, and ever-present marketing endeavors from telecom companies.

This unprecedented technological adoption represents the fastest generational rollout by the mobile telecom industry. Eighteen months after its initial launch, 5G accounted for more than 5.5% of mobile connections. In the first 18 months of 3G and 4G being launched, however, neither surpassed 2.2% of mobile connections.

Analyst Take

For short-sighted investors, the 5G rollout has taken too long, but historically, everything is going according to plan. This means 5G stock investing is still in its infancy.

The COVID-19 pandemic has highlighted the demand for 5G technology in supporting individuals, businesses, governments, and broader society. This might explain why the adoption of 5G has experienced unprecedented growth (a trend that’s expected to continue).

This will obviously be a boon for the telecom companies that have poured more than $100.0 billion into 5G infrastructure and network upgrades. And it cannot help but boost the bottom lines of other companies that support the 5G industry.

For patient investors, the next few years could be transformational for 5G stocks.