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A long, calm river: since 2002, the share price of American Tower Corporation (ATC) has continually increased, going from $1.5 in September 2002 to more than $200 today. And it will likely climb even more. For technical reasons, 5G networks need many more relay antennas in place than for 4G. ATC is no other than the global leader for the sites that host the antennas. The company builds towers and then rents them to operators that install their antennas on top. The US company now has more than 170,000 communications sites across 17 countries, including 41,000 in the United States. Most analysts recommend keeping shares, as they are already well valued.
Broadcom is thrilled. With the deployment of 5G, its products seem destined for success. The US company produces RF (radio frequency) filters for smartphones. The filters choose the correct range of frequencies. This type of component is playing an increasingly vital role in the move to 5G. While a current 4G telephone manages approximately 40 frequency ranges, it is expected to double for 5G.
As a result, the global filters market will take off, reaching $22.5 billion in 2023, compared to $8 billion in 2017, according to the firm Yole Développement. As a supplier to Apple and the global industry leader, Broadcom is particularly well positioned to take advantage of this market. While most analysts recommend purchasing shares, Broadcom must compete with Qualcomm, Qorvo, Skyworks Solutions and Murata.
The news broke in early May. After Sunrise decided to sell off its telecoms antennas business to Cellnex, Salt – another Swiss operator – sold its fleet of 2,800 antennas for €700 million.
The company now has 45,000 towers across six European countries (Spain, France, Italy, Switzerland, Netherlands and the UK), compared to only 7,000 in 2014. Comparatively, its competitor American Tower Corporation (ATC) has 170,000 sites around the world, but only 4,500 in Europe. Most analysts recommend purchasing Cellnex shares.
Ericsson employees have earned their Aquavit. After a long empty period and a difficult restructuring, the Swedish telecoms supplier has found success once again. In the period from January to March 2019, the group recorded a profit of 2.4 billion kroner (€230 million).
It’s an incredible performance, especially since the company lost 725 million kroner during the same period a year earlier. The results were buoyed by operators investing in 5G such as Swisscom, which chose Ericsson to deploy its network in Switzerland. The Swedish company is now the global leader in deploying 5G infrastructure. It directly benefited from decisions made by the United States and other countries to ban Huawei infrastructure in their countries.
In Q1 2019, Ericsson’s sales increased 43% in the US market compared to Q1 2018. Most analysts advise to keep shares. The fierce competition with Huawei and Nokia for the 5G market could weigh on margins.
One person’s misery doesn’t necessarily mean joy for another. While Nokia was expected to benefit from the arrival of 5G and the US ban on Chinese suppliers (Huawei and ZTE), the Finnish supplier is actually going through a difficult period. In Q1 2019, the company recorded an unexpected loss of €59 million, compared to a profit of €239 million in the first three months of 2018.
Analysts polled by Reuters were expecting total profits to range between €175 million and €457 million. After selling off its telephone business to Microsoft in 2013, the former global leader in mobile telephony changed course to focus on the telecoms infrastructure market and acquired Alcatel-Lucent in 2016. Since then, the company has suffered from a sluggish demand for 4G equipment. The move to the next generation is expected to spark a new cycle for Nokia, which already has more than 30 contracts signed around the world for 5G infrastructure, particularly with operator Salt in Switzerland.
But so far, Ericsson is the best positioned to take advantage of Huawei’s setbacks, and analysts remain cautious about Nokia shares.
In early April, US radio frequency parts manufacturer Qorvo announced it was acquiring Active-Semi International. With this acquisition, Qorvo hopes to “create new growth opportunities in 5G”, according to the press release. As a wireless network specialist, Qorvo provides radio frequency solutions (antennas, filters, amplifiers) for WiFi, 4G and 5G modems designed for smartphones.
The company is one of Apple’s suppliers. Active-Semi International produces circuits designed to manage the power supply and charge of batteries. These products improve battery consumption in smartphones and connected objects. As energy efficiency becomes increasingly important, especially for objects connected via 5G, Qorvo estimates that the acquisition will increase its market opportunities to reach more than $3 billion. Due to the 5G deployment, Goldman Sachs revised its recommendation from “neutral” to “buy”.
It was a major win. In mid April, Apple and Qualcomm ended their legal battles that had been going on for several years. While the terms of the peace agreement were not published, it is without a doubt a huge success for Qualcomm, whose share price soared 30% following the announcement and has yet to fall.
According to figures circulating in the media, Apple agreed to pay $6 billion to its supplier to end the commercial disputes. But this sum is only a small percentage of the jackpot that Qualcomm won. While the chip manufacturer’s products were banned in iPhones (which used Intel chips instead), the company could once again sell its semi-conductors to the Cupertino group, which would bring in $8 or $9 per every iPhone sold. While that price seems high for Apple, it’s most likely the company’s best solution. In fact, without this agreement, Apple may not have been able to launch its iPhone 5G before late 2020 – its partner Intel was running behind on the 5G front.
Qualcomm, which was already a market leader for 4G cellular modems and conquered nearly 50% of the global market according to firm Strategy Analytics, is now the leader in 5G chips. Its new modem, SnapDragon X50, was already chosen by ZTE, Oppo, Vivo, OnePlus and Xiaomi. Most analysts recommend purchasing shares.