Top 5G Stocks in the UK

We are more plugged into the internet than ever before. Devices we use to access the internet now hold our financial information, enable transactions, help us access information and keep us connected to our personal and professional lives. And in the age of the internet, 5G is seen as the next big jump in the transition to Web 3.0. 

While this technology is already widely accessible, 5G tech and its applications are projected to grow at a compound annual growth rate (CAGR) of 46.2% until 2028. This means 5G stocks could be an area for investors to explore to boost investment returns. The top telecom companies will make billions from this transition, and the UK market has some attractive options to consider.  

Below, we’ll break down some of the largest 5G stocks in the UK and the pros and cons of investing in 5G stocks. For savvy investors looking for an emerging market within the tech industry, this is an area worth analysing. 

What are 5G stocks?

5G tech is essentially the fifth generation of broadband cellular networks. 5G is almost 100 times faster than 4G and will eventually replace the old tech. Its deployment began in 2019, and 5G is now widely used. It is expected to reach 1.5bn users by 2025. 

5G stocks are types of stocks that oversee and facilitate the spread of 5G through infrastructural advancements and subscription packages. Companies in the UK are already scrambling to get customers on board. Installing mobile towers, user acquisition, maintenance, and proliferation of 5G are important functions of these telecom giants. 

Top 5G stocks in the UK

Let’s look at the four largest companies in the space currently working on making 5G more accessible in the UK. These are the biggest stocks in terms of market capitalisation, revenue generation, and market share. 

Vodafone Group 

The big-name mobile service provider, headquartered in Berkshire, has amassed one of the largest telecom user bases in the world. Vodafone is a major mobile service provider in 30 countries and has smaller operations in several more. Thanks to significant growth over the last few years, Vodafone currently has over 300m registered users. 

Vodafone’s revenue has been on the up since 2009. The company has managed to generate over €40bn annually for over a decade now. Considered one of the big five companies in the telecom sector, Vofone is a market leader alongside brands like AT&T and Verizon. In the UK, Vodafone is the leading telecom firm, which is why its 5G future holds a lot of potential.

Consumers rarely switch mobile carriers to avoid the hassle. With a large consumer base, Vodafone could, in theory, bring all these users into the world of 5G. And given its size and reach, it can come up with attractive onboarding offers to help users make the switch. 

The brand has already witnessed the switch to 4G and navigated it successfully. The company’s expertise and longevity demonstrate its ability to transition and grow. While the roadblocks are many, few companies are as well-equipped financially to undertake this switch. 

BT Group

British Telecommunications, now known as BT Group, is the UK’s largest telecom provider and a global leader in innovation. The company has already undertaken the task of bringing 5G to the UK and has onboarded 7.2m customers into the fifth-gen of the internet.

As a stock, BT Group is a widely respected blue-chip offering and one of the top traded firms every year. In the financial year 2021/22, the company recorded an impressive £20.8bn in adjusted revenue with pre-tax earnings of £7.6bn. It currently comes with a 5% dividend that has progressively increased with earnings. 

The company is spearheading the Openreach project that will bring full-speed fibre optic broadband to the UK. Its 5G-ready mobile service is already popular in the country and BT is creating the infrastructure required to facilitate these speeds as well.

BT recently received the distinction of being the first telecom firm in Europe to aggregate four carrier components (4CC) in a live 5G network. The firm, working with Nokia, combined four low-band and mid-band radio channels in EE’s (BT’s mobile 5G brand) live network spectrum. This is expected to create a better 5G experience across a much wider range of devices. 

Airtel Africa

While not a traditional 5G company, this service provider has a major reach in 14 African countries. With this growing market already under its belt, Airtel Africa could become a heavyweight in the region. 

Currently, only six African countries have access to 5G spectrums. And Airtel Africa just purchased $42m worth of 4G licensing in the Democratic Republic of Congo. While the region still lags Europe and America, it is expected to grow at a faster rate over the next decade. 

This is where Airtel Africa stands to benefit. While the pitfalls of exploration and development will fall on developed economies, Airtel Africa can sit back, wait for the trickle down, and install it in its existing markets without too much fuss. 

Spirent Communications

This is the first company on our list that is not a traditional service provider. Spirent specialises in testing 5G networks, creating infrastructure, and improving designs. It helps traditional telecom giants innovate faster and reduce costs.

Spirent also helps companies perform quality control, assurance, and automation challenges for the latest in communication and storage tech. These include 5G, cloud computing, and autonomous vehicle sensors.

It has partnered with some of the leading network providers and has been at the forefront of 5G development in the UK. As a result, this 5G share has jumped 174.2% in the last five years and does not show any impact of the pandemic, which is very evident in most companies. 

Pros of investing in 5G stocks

• Steady growth prospect: Investors are constantly on the lookout for industries with strong future prospects. Currently, the telecom sector offers some steady growth going forward. Although there are no guaranteed returns from investing in stocks, looking at the top companies from a healthy sector showing strong future demand is a good starting point. 

• Other industries will benefit: The telecom sector provides an indispensable service that will only grow in importance. The advantages of faster internet are universal. Faster internet means faster downloads. This allows media consumption, data farms, and banking services to be faster and more efficient.

Alongside the entertainment industry, faster internet also allows large factories to coordinate better, make faster design changes, and improve supply chains. Remote devices can communicate over larger distances, allowing more data and yields from mining operations. AI will make a huge leap when data collection and assimilation stages become faster. 

Along with artificial intelligence, virtual reality, cryptocurrency mining, augmented reality, and metaverse functions are all expected to become extremely widespread by 2040. This hinges on the fast deployment of 5G, which is why the industry is already witnessing a major jump in adoption. 

• Future profitability: The internet is evolving at breakneck speeds. 6G internet is already under development and expected to reach customers between 2040 and 2050. Companies currently facilitating the 5G expansion in Europe could remain profitable for decades to come.

Cons of investing in 5G companies

• Company costs: The biggest roadblock to 5G expansion is purchasing licensing for a share of the spectrum. To offer services, companies must procure 5G licences in every country they want to operate in. And because most governments offer contracts to the highest bidders, smaller providers are often left in the dust. 

• Infrastructure lift: The infrastructure needed for the expansion is immense. This means that the top firms will have to shell out millions to acquire or establish a 5G tower network to ensure strong speeds. This is we are looking at the biggest companies in the 5G space. Only the top players hold the patents and capital to make this transition possible. But this investment will allow them to amass millions of new users, boosting future revenue. 

• 6G is coming: Looking at the space right now, the speed of innovation has increased drastically. Pathbreaking changes often happened over decades. But now, things change really quickly, thanks to the resources being poured into making the internet more efficient and profitable. 

This means that the 5G expansion could quickly become obsolete when 6G is unveiled. With the tech space, there is no way to gauge what the future holds. This could quickly cripple companies that do not adapt fast enough. ­­­­

Should you invest in 5G stocks?

Currently, just a handful of telecom giants hold most 5G-related design patents. This restricts the current crop of 5G stocks on offer. While cable and wireless tech manufacturers stand to gain a lot, this is a high-risk route. Contracts in the tech industry are subject to constant changes given the value of patents. Companies are very reluctant about external manufacturers, which narrows investment opportunities further. 

For beginner investors looking at the exciting telecom developments right now, these 5G stocks will serve as a good blueprint for what the industry really has to offer. Through exploring these stocks, investors can learn about the tech and the major companies in the space.

While these companies are considered blue-chip 5G stocks, it is worth noting that past returns are not an indicator of future performance. However, analysts expect the top companies to continue the strong run telecom shares have had over the last 36 months. This is why 5G stocks have become indispensable portfolio builders today, making it an industry worth studying.