The Worldwide 5G race has impacted Chinese Telecom stocks. Many analysts feel that investors will now have access to exciting new opportunities. Telecom equipment makers in China are struggling to adapt to the potential changes in a 5G future. Chinese network operators are projected to spend billions of dollars on new 5G base stations over the next three years to help establish a new system of telecom networks.
Adjusting To The Cycles
China’s major network operators went through different cycles of positive movement and then decline. The highly profitable 4G investments are on the decline with 5G gaining momentum. Analysts point out that the features of 5G have to lead to a completely new system. Network operators are being asked to install more base stations. However, that will be a little more expensive to make, so there will be bigger business opportunities for station builders and suppliers. Module makers could see their revenue quadruple.
China noticed South Korea’s partnership with Verizon that lead to the release of 5G smartphones. Due to complications with Chinese investors having issues with the US government, the Telecom sector experienced significant losses. As a result, China has expedited the process regarding their 5G testing. Chinese investors expect network operators to get the licenses and launch the 5G services in select test markets over the next year. Analysts will look closely at the earnings performance to determine which telecom stocks are standing out from others. The Chinese government appears ready to support the technology.
Potential Outlook
Companies may be negatively impacted by the expensive investment costs of the new sector. Once the networks have established traction, there could be new apps developed that will improve industries, including the health care and automotive industry. The Internet of Things is another area where 5G networks can make a large impact. Chinese Telecom companies expect to become future World leaders in 5G networks.
There is still concern over The US-China Trade War and its potential ramifications. Chinese firms are not worried about the cost of the testing process. Analysts are also interested to see if The Chinese government will continue to support the implementation of the 5G networks.
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