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Ericsson Is Banking on 5G for Revenue Growth

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Dec. 14 2018, Updated 9:00 a.m. ET

Strong momentum in global 5G market

Ericsson (ERIC) claims that the global 5G market is experiencing strong momentum. According to Ericsson’s Mobility Report, “In the United States, one of the major communications service providers launched a 5G home internet service at the beginning of October, and all four of the country’s major service providers have publicly announced that they will begin providing 5G services between late 2018 and mid-2019.”

Other major markets such as South Korea, Japan (EWJ), and China (FXI) are expecting significant 5G subscription volumes. Europe has already held a few spectrum auctions, and the first 5G commercial subscription can be expected by 2019.

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Over 1.5 billion 5G subscriptions by 2024

The global markets will experience major 5G network deployments from 2020 onward, and Ericsson expects 5G subscriptions to reach 1.5 billion by the end of 2024, accounting for 17% of total mobile subscriptions in the year.

Demand for 5G will likely be driven by a rise in mobile data consumption. Global mobile data traffic is expected to increase over 5x between 2018 and 2024. Further, increased network capacity and a fall in cost per byte will also drive demand.

The transition to 5G will outpace the transition to 4G. By the end of 2024, LTE will continue to be the dominant mobile access technology with 5.4 billion subscribers, or 60% of all mobile subscriptions. Revenue for 5G hardware is expected to be $11 billion by 2022.

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