Next-generation 5G networks are widely viewed as one of the most impactful and anticipated technological developments in current times. With super-high speeds of 100 times faster than that of 4G networks, 5G is expected to bring broadband connectivity to 10 times the wireless devices and usher society into a digital industrial revolution that will open up new possibilities, innovative applications, reduced energy consumption, and economic growth.
The Impact of the 5G Value Chain on the Global Economy for 2020-2035
- Up to $13.2 trillion of goods and services through 2035
- $2.1 trillion in GDP growth
- 22.3 million new jobs
*According to a study commissioned by Qualcomm Technologies, Inc.
When Will 5G Finally Be Available?
Recent studies indicate that mobile operators are reporting rapid progress towards 5G commercialization. First-generation 5G network build-outs are already emerging in major markets globally. Steady advances toward virtualization of network functions are underway, which is crucial to the full realization of next-gen 5G benefits and the launch of standalone 5G. The COVID-19 pandemic is not believed to be having an impact on this progress. If anything, it is highlighting the need for fast-moving connectivity in an increasingly virtual, work-from-home world where video conferencing platforms are becoming a way of conducting business.
What Does 5G Mean for M&A?
5G technology is expected to change the world through such significantly higher data speeds and expanded network capacity. So what might this mean for the future of business and mergers & acquisitions?
Firstly, the 5G-implementation effort itself is conducive for M&A strategies. Telecom companies can gain market share by consolidating through M&A, while avoiding the need to purchase and install new equipment, obtain new licenses and contracts, and negotiate for cell towers and other key elements. The merger between Sprint and T-Mobile is one of example of how the 5G process is altering the industry landscape in the United States. An offshoot of the deal is that Dish Network purchased Boost Mobile from T-Mobile, with plans to build its own 5G network. Swedish telecom giant Ericsson has noted that M&A is an important part of the company’s growth strategy to be a leader in 5G around the world.
Telecom companies are also targeting tech companies with plans to integrate capabilities into their roadmaps for 5G. And big tech companies such as Microsoft are making moves to acquire young businesses that can help move them into the 5G space. Additionally, enterprises are implementing their own private 5G networks to power their businesses internally and more securely. Mobile equipment and services used by private networks is forecast to reach tens of billions in value by 2024.
With the game-changing availability of 5G, there will also be significant revenue opportunities and motivations for M&A seen outside the telecom and related industries.
- The manufacturing sector will be among the most transformed by 5G through Mission Critical Services (MSC), artificial intelligence (AI), and augmented reality (AR) tools that power smart factories and drones, gather data, predict outcomes, boost efficiency and offer round-the-clock monitoring of equipment and production. Automotive manufacturers are already clamoring to produce the first commercially viable autonomous vehicle and 5G is critical for real-time functionality and safety measures.
- The Massive Internet of Things (MIoT) will utilize 5G to implement and enhance the capabilities of smart cities, asset tracking, connected shopping, energy monitoring, smart homes, and smart agriculture. For example, 5G will enable the use of wireless sensors to monitor crop conditions and track livestock, resulting in better crop yields, higher quality produce, and more efficient farming.
- 5G will certainly be making its mark on the healthcare sector, as it will support a massive expansion of medical practices through connected devices. Because of the faster speeds and more reliable networks, more complex devices such as implants will stream real-time data to enable remote diagnoses, robotic surgeries, and telehealth services.
- Utilities can apply the capabilities of 5G for smart grid automation, infrastructure monitoring, automated meter reading, more accurate customer billing, and fraud prevention.
- The transportation and storage sectors will benefit from 5G through improved reliability, cost management, fleet management, and connectivity that allows the monitoring of drivers and engine performance. Public transportation can utilize 5G to offer enhanced online experiences for passengers and to monitor for mechanical and electrical risks in order to prevent damage or disruptions in service.
The rollout of next-generation 5G technology will also drive M&A opportunities in many other sectors, such as retail, media, marketing, entertainment, gaming, mining, construction, finance, education, and supply chain management. Entrepreneurs are armed with big ideas and a need for financial investment and business expertise. Strategic acquirers and private equity will be particularly interested in lower and middle-market companies that provide unique technological offerings, key talent, and relevant services that can improve portfolios and business operations as well as consumers’ lives in general.
5G has the potential to boost the valuation of your company. If you are considering selling, buying, growing, or exiting a business, the mergers and acquisitions experts at Benchmark International are here to help. Our award-winning team is laser-focused on maximizing value, committed to helping you achieve your aspirations, and offers unique perspectives to bring you peace of mind throughout the process.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.