Weak Phone Market Slows 5G Growth, But Future Remains Bright

A sluggish mobile phone market in 2022 is hitting the transition of telecom subscribers to 5G networks, but total 5G connections worldwide are still expected to grow 86% and reach 1.15 billion at the end of the year. This is the finding of our latest forecast, available to subscribers here.

Macroeconomic weakness is inevitably affecting the sales of new mobile phones this year, with global shipments expected to dip 10% to 1.43 billion units, of which 620 million are expected to be 5G-capable. This will slow the shift to 5G, but active connections on 5G networks worldwide will still almost double in 2022, in no small part thanks to investments by network operators to expand coverage in crucial markets, as well as some important network launches in emerging markets.

The global 5G connection count will continue to rise as network operators that have already deployed the technology make efforts to switch customers to 5G. Migrating customers to the latest networks is vital for operators as it helps them upsell new services, improve operational efficiency and foster a more sustainable business.

For this reason, we expect network operators to continue encouraging phone-makers to bring 5G capabilities to cheaper devices in their ranges, so that more and more 5G-enabled devices are sold. Higher costs create a problem for device makers, but with weak demand, the mobile phone market will be extremely competitive over the next few quarters. So, we expect to see 5G sliding down the price tiers.

CCS Insight forecasts 5G connections will rise in all regions of the world in the next four years, reaching 4.2 billion at the end of 2026. However, 70% of those will remain in the developed markets of the West and Asia–Pacific, alongside China. The current macroeconomic uncertainty will play a further role in slightly delaying launches by operators that haven’t launched 5G yet, especially in more vulnerable emerging markets.

The big promise of 5G has always been in the role it has to play in the Industry 4.0 environment. However, businesses have been slow to adopt 5G in industrial applications, and by 2026 industrial applications of the Internet of things will account for just 10% of global 5G connections. The rest will be almost entirely mobile phones, although other devices like tablets, laptops and home Internet routers will make modest contributions.

5G hasn’t had a smooth ride, with the pandemic hitting equipment and device supply chains and operators facing difficulties recouping the cost of new networks, but the future remains bright. More operators are deploying advanced features that raise the performance of 5G networks. This means new opportunities to combine advanced connectivity with technologies such as artificial intelligence, edge computing and analytics. This will create new applications of the technology, as well as new sources of revenue.

The chart below shows CCS Insight’s forecast of 5G connections by region to 2026.

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