The telecommunications space has gained momentum with the initial rollout of 5G driving interest. Unlike its predecessors, this network relies on both the implementation of a new technology, small cell towers, and necessary updates to existing macro towers. It is estimated an additional 250,000 to 1,000,000 new, small sites will need to be constructed during the rollout.(1)
To understand the impact this network will have, it is important to look at the technological innovations spurred by the implementation of 4G. 4G is the foundation on which the smartphone revolution was built, leading to the development and rollout of apps such as Uber, Instagram, Netflix, and Snapchat.(2)
5G networks aim to provide higher speed, lower latency, and greater capacity than 4G LTE networks. Nearly every industry is exploring the potential of 5G to fundamentally transform their business; the network will allow technology such as self-driving vehicles and autonomous manufacturing to run more efficiently and on a much larger scale. And while this network seems to be all the rage now, the rollout has just only begun, 4G is still expected to be the standard network until 2030. With an average network lifespan of about 20 years, we are just scratching the surface of the expected impact that 5G will have in the long run.(3)
The infrastructure to fully rollout 5G is in initial stages, and the M&A activity surrounding this space has taken notice. With the North America telecommunications market estimated at $245M in 2020 and expected to grow to $830M by 2025 at a CARG of 26.8% over the forecast period, it makes sense that there has been an increased number of deals surrounding this space.(4)
More specifically, we are seeing M&A activity that addresses both the challenges and the benefits of 5G in the telecommunications industry. For one, we are seeing a shift of digital infrastructure assets, that include towers, fiber optics and data centers, from teleco players to infrastructure investors. Secondly, we are seeing investments and acquisitions of telecommunications infrastructure builders by companies trying to get ahead of the boom in carrier investment in the construction of the necessary 5G infrastructure.
Notable Telecom Investments
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DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.
