The global 5G mobile subscription is poised to surpass the one billion mark this year, two years sooner than 4G, which took ten years to hit the milestone. The latest edition of the Telefonaktiebolaget LM Ericsson (ERIC) Mobility Report indicates North America will lead the world in 5G subscription penetration over the next five years. Nine out of every 10 subscriptions are expected to be 5G in North America in 2027.
However, according to a Reuters report, a weaker global economy and uncertainties triggered by Russia’s invasion of Ukraine could slow 5G adoption. This is why Ericsson lowered its estimate for 2022 by about 100 million. Despite the headwinds, 5G subscriptions grew by 70 million in the first quarter to 620 million, with 4G subscribers growing by 70 million to 4.9 billion. Reuters reports that 5G subscriptions will reach 4.4 billion in 2027, with 4G subscriptions expected to peak and then decline as focus shifts toward 5G.
Adoption of 5G has been on the rise, partly because the technology offers much higher speeds than previous generations. The technology also promises to connect machines in ways that can enable futuristic features such as autonomous driving.
Mobility Report
According to the Ericsson Mobility Report, 5G networks will account for 82% of all subscriptions in Western Europe by 2027, 80% in the Gulf Cooperation Council region, and 74% in North-East Asia. According to Reuters, while 5G penetration has yet to begin in India, the country is expected to have about 30 million 5G subscribers by year-end and around 50 million by 2023. According to the report, India will account for 40% of all subscriptions by 2027. A transition from 4G worldwide will see 5G account for almost half of all global subscriptions by 2027, at 4.4 billion.
The Mobility Report also indicates mobile network traffic has doubled over the last two years, driven by increased smartphone and mobile broadband usage. Digitization of societies and industries has also fuelled traffic growth.
Around 100 million people become mobile broadband subscribers yearly, affirming the strong demand for data connectivity and digital services. The rising number of telecom operators offering 5G connections and handset prices tanking to lows of $120 have also helped accelerate 5G adoption.
Wall Street’s Take
The Street is optimistic about the stock, with a Moderate Buy consensus rating, based on one Buy and one Hold. The average Ericsson price forecast of $15 implies 102.98% upside potential from current levels.
Bloggers’ Opinion
TipRanks data shows that financial bloggers’ opinions are 100% Bullish on ERIC, compared to a sector average of 65%.
Key Takeaway for Investors
The number of 5G subscriptions will surpass the 1 billion mark as telecommunication companies are investing big in upgrading their networks. Ericsson is a leading supplier of the 5G equipment needed to enable the networks. As more companies ramp up investments in 5G infrastructure, the company remains well-positioned to attract a good chunk of the orders.
As a leader in 4G infrastructure, Ericsson also boasts a large customer base. With most of these customers expected to move to 5G over the coming years, the company should see strong demand for its 5G equipment, which should strengthen its revenue base.
