Jennifer Fritzsche, Senior Analyst of Wells Fargo Securities, LLC got to spend three days of this week in Barcelona, Spain attending Mobile World Congress (MWC). While there, she said her team was able to identify key themes which she believes will have an impact on different verticals within her sector. The bottom line, in her view, was the hype of 5G seems to be reaching a point of too much euphoria.
“As VZ indicated last week, the real 5G revenue opportunity likely will not be seen until the 2020/2021 timeframe. We continue to believe the early 5G winners will be the ‘arms dealers’ which supply the infrastructure. There seems to be particular focus on the Edge infrastructure theme with mobile edge computing capabilities,” Fritzsche said. “In our view, those names leveraged to this theme should be well positioned in the initial stages of the 5G buildout.”
So while hype on 5G is high, she said the reality is a bit tougher such as “what’s the key app?” Depends on who you ask.
“Most believe 5G will offer improved speeds, coverage, lower costs, etc. In our view, the key point is that 5G will change how the average consumer and enterprise uses connectivity,” she said. “In a 4G world (and every ‘G’ that came before it), connectivity drove the use case. In 5G, it essentially will be the opposite, where the use case will drive the amount of connectivity and manner in which that connectivity is used.”
Companies best positioned, in Fritzsche’s view, are those that own more of the infrastructure. As 5G infrastructure’s reach gets wider, she believes it will be companies that offer “network solutions” to operators and check multiple infrastructure boxes (i.e. fiber, small cell, macro, backhaul) that will be best positioned. Her names on this list include ExteNet and CCI.
Fritzsche said Sprint (S) used MWC to announce it would be rolling out four, live 5G mobile markets by May and a total of nine cities in the first half of 2019, covering 1,000+ square miles. Sprint’s CTO, “Dr. John Saw offered very specific maps as to where its coverage in each of these markets would extend to,” she said “which we note was far more detailed than those received from any other U.S. operator.” Comments? Email Us.
March 1, 2019