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Global investor community flocks to 5G

5G is now a reality, but how to make money from it remains a question. Research unearths insights that could offer direction on the specific industries in which to make returns on investment in next-generation networks

As 5G enters its rapid deployment phase, research commissioned by technology solution provider World Wide Technology (WWT) has revealed the top five sectors for 5G investment, with cloud computing identified as the top category for investment, closely followed by smart mobility, media and entertainment, gaming and augmented/virtual reality (AR/VR).

For its study, 5G: follow the money, WWT worked with Walnut Unlimited to conduct 100 interviews with venture capital firms (VCs) and 35 investors across the UK and 65 in the US, between August and September 2021. All the respondents worked in finance – 37% in investment banking, 28% in hedge funds, 22% in private equity and 13% in venture capital.

Respondents were selected on the basis of their focus on studying specific sectors to inform investment decisions. All specialised or took an active interest in telecoms and/or IT. More than half of them manage assets of more than $2bn, and two in five manage assets of more than $5bn.

The research claimed to have revealed a fundamental excitement among investors about 5G technology and the returns it will bring. As many as 92% of the sample have invested, or planning to invest, in companies dependent on 5G technology. According to WWT estimates, this adds up to a substantial overall 5G investment figure.

The company said the funds its respondents represent will spend $59bn on 5G in 2022 and they expect their investment to grow to $94bn within five years. Also, the research revealed they are also confident that this investment will pay off, with 76% predicting an above-average return on their 5G investments over the next six to 10 years.

The respondents were also bullish about service providers’ prospects in the 5G era. Asked “Can you name any 5G-enabled companies that are expected to make it big in the next 12 months?”, 41% of investors named an operator. This was second only to suppliers of components and hardware (47%).

Looking at the key areas of investment, WWT noted that as with 5G itself, transformative applications rely on cloud computing to exist in the first place, which logically makes this sector most attractive from an investor perspective. Nearly three-quarters (72%) named cloud computing as currently seeing above-average investment in 5G-powered technology. Cloud was followed by smart mobility at 70%, with 56% selecting media and entertainment, 44% naming gaming and 42% AR/VR. Other sectors of note among investors were supply chain (33%) and mobile healthcare (24%).

Now is the time to invest in the foundational technologies of 5G, said Victor Holmin, director of discovery and innovation at WWT. “Our research has clearly shown that there is clear excitement in 5G among investors – and that these five sectors in particular are ripe for growth. Each of these sectors will require high-speed, secure infrastructure with significant processing capability at the edge of the network in order to thrive.

“Service providers need to make the investment in foundational technologies, such as edge, and look to build a platform that will enable them to deploy services which can build the promise of 5G into a reality.”

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