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T-Mobile to Trial 5G; Should Verizon and AT&T Worry?

Zacks Equity Research

T-Mobile US Inc. TMUS is leaving no stone unturned when it comes to challenging the bigger wireless operators in the US market. The company has revealed its plans to field test the next-gen 5G technology in partnership with the likes of Ericsson ERIC and Nokia Corp., and is due to begin the same in the second half of this year. Earlier, T-Mobile’s bigger rivals Verizon Communications Inc. VZ and AT&T Inc. T had voiced their intention to test the new technology.

The 5G Advantage

The next-gen 5G network will provide 50 times the throughput of the currently available standard 4G LTE network. Latency period of data delivery will be in single milliseconds. Further, 5G technology is designed to be more power efficient than any other standard wireless network available these days.

Therefore, 5G-enabled mobile devices are likely to last much longer than their 3G or 4G counterparts. Moreover, superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of Internet-connected devices, popularly known as Internet of Things (IoT).

A faster mobile network is always welcome, but there exists no 5G standard as of now. Also, it is not the speed or lower latency that alone is important – the companies testing the technology should aim at providing better security in the networks as well. Moreover, innovation in distributing the 5G signals efficiently should be one of the many agenda in the test. We expect the telecom operators to expand their next-generation network through fewer cell sites, maximizing reach through minimum towers – thereby saving rental costs in the process.

The Bottom Line

T-Mobile is looking to pose a challenge to its larger wireless rivals, namely Verizon and AT&T. Although Verizon and AT&T were the first ones to announce 5G testing plans, they are yet to start the same. Currently, all the carriers are in the race to emerge as the first mover in the U.S. market, and outpace other in the trial run and subsequent commercial deployment of 5G. It remains to be seen whether T-Mobile’s attempts to bring 5G to the U.S. market before any of its peers bear fruit and further its quest to be the numero uno in the domestic space.

T-Mobile presently carries a Zacks Rank #3 (Hold).

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AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
T-MOBILE US INC (TMUS): Free Stock Analysis Report
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