19th May 2022
For people who love faster phone and internet connections and anyone excited to invest in 5G stocks, the 5G rollout can’t happen quickly enough. While there have been obstacles in the path to 5G nirvana, last year brought notable advances in 5G adoption and set the stage well for 2022.
We take a look at the progress of the 5G rollout, and how it could impact 5G stock prices.
US airports caused a 5G hiccup
AT&T and Verizon originally intended to “switch on” their broader 5G networks in December 2021, but they hadn’t reckoned on complaints that 5G connections could disrupt air traffic. The concern was that the radio frequencies used by 5G networks are too close to those used by airplane radio altimeters.
Airlines for America, which represents 10 leading airlines in the US, said that by interfering with the operation of altimeters, 5G could affect pilots’ ability to land safely in inclement weather. The FAA warned that 5G could cause difficulties with flight systems on the Boeing 787 Dreamliner, and airplane manufacturers Airbus and Boeing issued a rare joint warning on the matter1. In a Senate Commerce Committee hearing, Scott Kirby, CEO of United Airlines, complained that up to 5% of flights could be delayed because of 5G disruption2.
The unexpected opposition forced AT&T and Verizon to delay 5G rollout twice, before resulting in a temporary compromise that placed a 2-mile buffer zone around airports3. However, that’s not a practical solution for the long term, since significant populations live and work within that area.
But telecoms companies insist that only around 10% of masts are affected4, and a lasting agreement seems to be on the horizon. The FAA approved approximately 90% of commercial airplanes in the US to land safely in a 5G environment, and has analyzed precise data about the location of wireless transmitters and the effects of 5G signals on sensitive aircraft instruments, to reduce the size of the 5G-free buffer zone5.
But 5G rollout hasn’t be derailed
2021 saw significant progress for 5G, and it’s generally expected that 2022 should build upon that momentum to become a banner year for 5G rollout. By late November 2021, 170 mobile operators worldwide had launched commercial 5G services, reaching 7% global population penetration6. As the maps below show, Europe and the US both possess widely distributed, active 5G networks.
In the US, the main telecommunications companies all plan to ramp up 5G rollout this year. AT&T is launching its “5G+” service in eight metropolitan areas, and plans to extend to 40 cities and another 30 stadiums and other venues, to reach 75 million customers by the end of 20227.
T-Mobile predicts that the end of the year will see 300 million people served by its midband 5G network, a jump from 200 million from the start of the year. It is also deploying 5G fixed residential broadband, and predicts that 7-8 million users will adopt it by 20258.
On top of all that, the US market is likely to be stimulated by the arrival of 5G entrant Dish, which says its commercial 5G service will go live early in 20229.
But the biggest 5G rollout winner so far in 2022 is Verizon.
Verizon capitalizing on 5G adoption gains
2021 was an admittedly poor year for Verizon, with share prices declining by an average of 12%, but its 5G rollout progress in 2022 has perked prices up considerably. As noted by Livy Investment Research, “stepping into the new year, Verizon has been on a steady reversal of said losses by capitalizing on the growing 5G momentum.10“
Verizon has an impressive roster of 5G services, including 5G Ultra Wideband on the high-band mmWave spectrum, for ultra-high speed connections that are 10x faster than 4G LTE; 5G Nationwide on the low-band spectrum, for broader coverage at slightly lower speeds; and 5G Home and Business Internet.
Its 5G Ultra Wideband rollout is on track to meet its goal of covering over 100 million customers in more than 1,700 US cities by the end of the first quarter. The company has installed almost 8,000 cell tower sites and is pouring resources into midband C-band 5G services, which will combine with the mmWave spectrum to advance 5G Ultra Wideband. It predicts that by 2024, it will have fully deployed its C-band spectrum so that over 250 million Americans will have access to the 5G Ultra Wideband network11.
5G Nationwide is progressing similarly well, with more than 2,700 cities in the US connected to the service. Verizon says that 5G Nationwide has converted over 25% of its consumer phone base to 5G-enabled devices. Finally, Verizon 5G Residential Internet now covers 15 million homes in over 57 US markets and is expected to reach 30 million by the end of 2023, while 5G Business Internet has expanded into over 42 markets in the US12.
Thanks to this rapid rollout, the Verizon Consumer Group forecasts that revenues will grow at a CAGR (compound annual growth rate) of 3.4%, from $94.8 billion at the end of 2021 to $115.6 billion by 2026, while the Verizon Business Group predicts revenues will jump from $31.0 billion to $35.3 billion in the same time period, at a CAGR of about 2.2%13.
5G rollout could drive the choice of 5G stocks to buy
If, as expected, 2022 proves the year of 5G adoption, that could have a positive knock-on effect on the best 5G stocks. Demand certainly isn’t slowing down, with PWC predicting that global demand for 5G-enabled devices will grow at a CAGR of 38% over 5 years, so there’s every reason to look forward to more 5G rollout14.
All kinds of top 5G stocks, including 5G network stocks, semiconductor chip stocks, and 5G infrastructure stocks are expected to benefit15. Additionally, companies that serve the broader 5G ecosystem, like those that make fiber-optic technologies and cell tower owners, are likely to ride the surge16.
People who want to invest in the best 5G stocks, but are nervous of their ability to select which 5G stocks to buy, could take advantage of 2022’s 5G rollout by buying into a 5G ETF like Defiance’s FIVG, which helps spread their investment across a number of top 5G companies to invest in.
2 “U.S. airlines warn 5G wireless could wreak havoc with flights” December 16, 2021 https://www.reuters.com/business/aerospace-defense/us-airlines-warn-5g-wireless-could-cause-havoc-with-flights-2021-12-15/
5 “The F.A.A. announces progress in expanding 5G service at airports” January 28, 2022 https://www.nytimes.com/2022/01/28/technology/faa-5g-verizon-att.html
6 “5G technology and networks (speed, use cases, rollout” January 25, 2022 https://www.thalesgroup.com/en/markets/digital-identity-and-security/mobile/inspired/5G
7 “What consumers need to know about this week’s AT&T-Verizon 5G rollout” January 20, 2022 https://www.cbsnews.com/news/5g-rollout-verizon-att-consumers-need-know/
8 “5G Stocks To Buy And Watch: AT&T, Verizon Financial Impact From Airport Snafu” January 19, 2022 https://www.investors.com/news/technology/5g-stocks-5g-wireless-stocks/
9 “The status of 5G rollouts in 2021 and 2022” October 2021 https://www.techtarget.com/searchnetworking/answer/What-is-the-status-of-5G-rollouts-in-2020
10 “Verizon Stock: Outsized Returns With Extended 5G Rollouts In 2022” January 14, 2022 https://seekingalpha.com/article/4479585-verizon-stock-5g-rollouts-2022
11 “Verizon Stock: Outsized Returns With Extended 5G Rollouts In 2022” January 14, 2022 https://seekingalpha.com/article/4479585-verizon-stock-5g-rollouts-2022
12 “Verizon Stock: Outsized Returns With Extended 5G Rollouts In 2022” January 14, 2022 https://seekingalpha.com/article/4479585-verizon-stock-5g-rollouts-2022
13 “Verizon Stock: Outsized Returns With Extended 5G Rollouts In 2022” January 14, 2022 https://seekingalpha.com/article/4479585-verizon-stock-5g-rollouts-2022
14 “Global 5G Devices Market Size & Share Will Reach USD 26.1 Billion by 2026: Facts & Factors” December 28, 2020 https://www.globenewswire.com/news-release/2020/12/28/2150847/0/en/Global-5G-Devices-Market-Size-Share-Will-Reach-USD-26-1-Billion-by-2026-Facts-Factors.html
15 5G Stocks To Buy And Watch: AT&T, Verizon Financial Impact From Airport Snafu” January 19, 2022 https://www.investors.com/news/technology/5g-stocks-5g-wireless-stocks/
16 “5G Stocks To Watch Following The Latest Spectrum Auction” January 19, 2022 https://www.forbes.com/sites/greatspeculations/2022/01/19/5g-stocks-to-watch-following-the-latest-spectrum-auction/?sh=52e31643cc94