The revolution of the internet, smartphone, social media, and 4G or 5G networks has catalysed the growth of almost all aspects of India’s development journey in the 21st century.
The 5G space has the potential to bring immense opportunities for various sectors in the country. Moreover, the companies associated with the 5G services are putting all their efforts into its optimum use. The market value of global services associated with 5G technology is expected to reach US $188 billion by 2025.
The stock market quickly absorbs the market sentiment. So, investors expect that a bullish take on the 5G revolution will also reflect in the growth of companies, directly or indirectly linked with the 5G revolution.
What is the 5G revolution?
India’s vast population also demands better network needs. The growth of digital infrastructure in India is increasing every day. Internet needs can be easily satiated by the 5G revolution. 5th-generation mobile networks services have immense benefits and have already entered India.
On October 1, 2022, the government launched the 5G service in India, along with different applications for it. It will change the position of India in the world, based on tech expertise. The participation of private companies with the government’s support would help in the proper financing of the revolution.
The 5G network can potentially improve digital connectivity, enhance interface and experience, increase speed and performance, etc. It will develop areas like health, transport, agriculture, education, industries, logistics, etc. This confidence in 5G can help businesses improve their efficiencies and profits and attract investors to invest in their growth.
Effect of 5G on the financial system
Post-demonetisation in 2016, the trend of a cashless economy started. A lockdown in 2020 catalysed this growth. However, despite all this, people found it tough to cope with online payment systems. Then, during a similar time, the Unified Payment Interface gained huge exposure and people started realising the ease of this facility.
It highlighted the need for better digital infrastructure. 4G was coping well with the need. However, the benefits of 5G would align favourably. Moreover, it will help increase the speed and security of transactions in the financial sphere.
Also, read this: Money matters: How digital tools are transforming financial literacy?
5G stocks to invest in India
The bullish sentiment for 5G will help the stocks of the companies associated with 5G. It will also drive growth, and investors may get the opportunity to be a part of this probable rally in the market. Also, the increased investments would help bring more efficiency and eventually, more profits for the company.
Your checklist!
Investors should wisely check the following aspects of the companies having direct or indirect relations with 5G space in India.
- Business – Investors must check about how the company is related to 5G, its products, sector experience, the experts and management, etc.
- Market share – It indicates the efficiency of dominating the market. The competitors in the market should be analysed to understand how the company has maintained its share over the years.
- Financials – The company’s viability to finance its projects and adopt the 5G revolution should be checked before investing.
- Future plans – The future aspirations of the company should match the need for technology as it needs heavy preparations for adoption like that for 5G.
- Collaborations and partnerships – A good set of partnerships would add to the company’s strength. Moreover, it will help companies combat any future threat regarding the technology.
- Current operational metrics – These would indicate the company’s operational efficiency. Their current operations and future ambitions to adopt the technology of 5G will help ascertain their capability to survive in the market.
Must read : Connecting communities: A mobile broadband case study.
Stock to invest in the 5G revolution
Investors should check the company’s relation with the 5G revolution. Telecom operators are the most highlighted segment for the 5G network. So, this list includes some top telecom companies. Moreover, the infrastructure for the 5G network would be in demand for accessibility of this network. Tech support and application development would be catalysed by the 5G technology.
- Bharti Airtel (NSE: BHARTIARTL, BSE: 532454 )
It is one of the leading players in the telecommunication sector of India. As of FY 24, the company has a customer base of nearly 152 million. Moreover, it played a pivotal role in establishing 4G and 5G space in the country.
In the first quarter of 2024-25, the company has a 5G customer base of more than 72 million. It has also launched Airtel 5G Plus to spread the access.
Moreover, the number of 5G devices in India is increasing. So, it is expected to drive better momentum for the company’s stock in the upcoming years.
- Reliance Industries Limited (NSE: RELIANCE, BSE: 500325)
The company’s subsidiary, Reliance Jio, is famous for its feasible mobile plans and wide network. As of FY 24, Jio’s subscriber base has reached 481.8 million. Its True5G network has nearly 108 million subscribers in the world.
According to its annual report, Jio is the telecom operator with the highest standalone architecture for 5G rollout. Such a wide network opens the prospects for investor’s confidence in the company.
- HFCL Ltd (NSE: HFCL, BSE: 500183 )
Himachal Futuristics Communications Limited is a famous brand providing telecom infrastructure, system integration, optical fibre, etc. They have a specialised product line for 5G network installation, such as fixed wireless 5G equipment.
Moreover, they have strong strategic partnerships with companies like Wipro, Qualcomm, Capgemini Engineering, etc., for the smooth rollout of 5G cells. As the 5G network spans the country, the need for equipment and infrastructure for accessibility will increase.
Thus, an indirect relation with the 5G network holds the potential to benefit the company’s stock.
- Vodafone Idea Ltd (NSE: IDEA, BSE: 532822 )
Vodafone is a known name in the country, and its integration with Idea has provided an added advantage to the company. Being a telecom operator, it has strong ambitions to span across the country with a 5G network.
As of June 2024, the company has the ambition to invest nearly ₹50,000 crores to ₹55,000 crores in capital expenditure for the 5G service expansion. It has adopted the technology late and is about to launch its 5G service.
However, its infrastructure is all set to embrace the process. It claims to have the highest 5G spectrum in the industry. As of August 14, 2024, its share price is low. However, its futuristic prospects may pose an attractive opportunity for investors.
- Tech Mahindra Ltd (NSE: TECHM, BSE:532755 )
The company has a crucial position in the technology industry and is in the process of developing a strong 5G suit in its technical assistance.
The company mainly deals with IT services like application development, consulting, business solutions, etc. It has a strong grip over futuristic technologies like 5G, blockchain, metaverse, etc. Thus, its stock may pose a potential investment for the investors.
Financial performance (FY24)
| Particulars (₹ crores) | Bharti Airtel | Reliance Industries | HFCL Ltd | Vodafone Idea Ltd | Tech Mahindra |
| Revenue | 149,982 | 899,041 | 4,465 | 42,652 | 51,996 |
| Profit before tax | 12,679 | 104,727 | 454 | -30,410 | 3,224 |
| Net profit | 8,558 | 79,020 | 338 | -31,238 | 2,397 |
Summary
The 5G revolution in India holds optimistic perspectives for the digital and financial space in the country. Investors can have amazing opportunities to become a part of this rally. However, any investment should be done after analysing and understanding its feasibility. If required, investors should take assistance from their financial advisors.
Check this out! Telecom industry in India: An overview of growth and opportunities
