Top trends to profit from in 2022: 5G & Telecom revival

A new generation of mobile connectivity emerges roughly every decade. The first generation (introduced in the 1980s) relied on analogue technology. When 2G arrived in 1991, networks went digital. In 2001, 3G replaced circuit switching with the more efficient packet-switching technology. And a decade later, 4G networks introduced internet-protocol technology, enabling mobile devices to access broadband internet. Each generational change brought new frequency bands, higher speed and laid greater emphasis on transmitting data rather than only voice.

Finally, 5G technology is here, bringing the potential of enhanced mobile-communication standards. With 5G technology, the number of user devices is likely to increase by a whopping 100 times, while there will be a significant reduction (around 10 times) in network latencies (i.e. response time) to support real-time internet applications and give users a seamless and ultra-reliable network experience. Further, with this latest entrant, internet speed is likely to be 10 times faster than that offered by its previous generations.

With 5G pilot trials being conducted now in India, the rollout of 5G services is expected to commence by the end of 2022. While the promise of 5G is on the horizon, the Indian telecom sector is witnessing some major moves. The recently announced revival package, combining both short-term relief (in the form of a four-year moratorium for financially stressed entities) and long-term measures for the entire industry (in the forms of amending the definition of adjusted gross revenue and scrapping spectrum-usage charges in future auctions), was a much-anticipated silver lining for the sector. On the other hand, three private players have recently raised mobile prepaid tariffs. However, with this move, Airtel and Jio will remain in a better position, while Vodafone Idea is likely to remain cash-strapped.

In focus: Tech Mahindra
This information technology (IT) services and consulting firm was founded as a joint venture between Mahindra & Mahindra and British Telecom in 1986. Later, British Telecom sold its stake to Mahindra & Mahindra. Its service offerings include network services, engineering services, platforms, security, digital marketing and customer experiences, business process services and IT.

The company is a trusted transformation partner for several communication-service providers, telecom-equipment manufacturers and independent software vendors. Hence, the growing adoption of 5G is believed to augur well for the company. Tech Mahindra already boasts of designing, building, testing and operating the world's first 5G end-to-end cloud-native platform for a Japan-based Tier-1 carrier.

While 5G for telecoms is likely to drive the company's near-term growth, 5G for enterprises would take some time to be its growth driver. Unlike its competitors Infosys and Tata Consultancy Services that operate in the operating-expenditure-related business, Tech Mahindra is involved in the capital-expenditure-related business. This gives the company a competitive edge in the 5G world. As revealed by a Sharekhan report, this IT and consulting firm is poised to benefit from an open 5G network (a market opportunity of $40-50 billion), network on the cloud ($8-10 billion), cognitive-managed operations ($10-15 billion), digital-operating support system ($5-8 billion) and enterprise-network modernisation (greater than $50 billion).

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