Best Research Ideas

Telecom & Networking Equipment – 5G: Why We Don’t Believe in the 5G “Cycle”

Jefferies believes the ROI for 5G investment in the U.S. is significantly less attractive that it was for prior 3G and 4G investments, largely because wireless is more mature, with higher smartphone penetration now relative to history and peaking average revenue per user (ARPU). While some cutover from 4G to 5G is likely, Jefferies does not expect overall capex to grow due to 5G technology availability over the next two years. Further out, applications such as autonomous vehicles should make for a better case for 5G. Jefferies favorite Communication Equipment plays are CIEN and LITE, which are beneficiaries of increasing optical fiber content associated with wireless network deployments. In the semiconductor space, Jefferies views XLNX, LSCC, MRVL and ADI as beneficiaries as they are key suppliers into 5G base stations. FULL REPORT

George Notter, Telecom & Networking Equipment