With the commercial deployment of 5G, the coverage build-out and number of subscriptions are likely to grow faster than expected. Per the latest edition of the Ericsson (ERIC - Free Report) Mobility Report, 5G is expected to reach 40% of the world’s population with 1.5 billion subscriptions in 2024, making it the fastest generation of cellular technology to be rolled out globally. The industry boom has been magnified by innovation that reuses existing infrastructure and available spectrum for increased network capacity, lower cost per gigabyte and new use cases.
Primarily, North America and North East Asia are expected to lead the 5G uptake. While in North America, 5G subscriptions are predicted to account for 55% of mobile subscriptions by the end of 2024, the same in North East Asia is expected to be more than 43%. In Western Europe, 5G is estimated to account for about 30% of mobile subscriptions by the end of 2024.
Meanwhile, the uptake of NB-IoT and Cat-M1 technologies is driving growth in the number of cellular IoT connections worldwide. Cellular IoT is on its way to becoming the preferred choice for wide-area IoT applications. Driven by a strong uptake in Northeast Asia, connections are set to surpass 4 billion by 2024. Of the total cellular IoT connections forecast for 2024, Northeast Asia is expected to account for 2.7 billion.
Ericsson is helping communication service providers to realize the full value of connectivity. The company’s portfolio is designed to help customers go digital, increase efficiency and find new revenue streams. Mobile data traffic grew nearly 79% year over year in third-quarter 2018, reflecting the highest growth since 2013. The increased data-traffic-per-smartphone in Northeast Asia, particularly China, has also pushed up the global traffic significantly. Around 90% of total mobile data traffic is generated by smartphones today and the figure is projected to reach 95% at the end of 2024. By the end of 2024, total mobile data traffic is predicted to be five times higher, with 5G networks likely to carry 25% of mobile traffic.
Ericsson is focusing on 5G system development and has undertaken notable endeavors to position to take market lead on 5G. The company believes that standardization of 5G is the cornerstone for digitization of industries and thus it continues to execute its focused strategy with investments in its competitive 5G-ready portfolio to enable customers seamlessly migrate to 5G.
The stock has returned 29.9% in the past year, outperforming the industry’s 0.7% rise.
Ericsson currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the industry are QUALCOMM Incorporated (QCOM - Free Report) , Ubiquiti Networks, Inc. and Juniper Networks, Inc. (JNPR - Free Report) . While Qualcomm and Ubiquiti sport a Zacks Rank #1, Juniper carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Qualcomm has a long-term earnings growth expectation of 11.5%. It beat earnings estimates in the last four quarters, the average being 18.5%.
Ubiquiti has a long-term earnings growth expectation of 14%. It surpassed earnings estimates in three of the trailing four quarters, the average positive surprise being 11.3%.
Juniper has a long-term earnings growth expectation of 5.3%. It beat earnings estimates in each of the trailing four quarters, the average being 11%.
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