Phone tower play for retail investors
As the Australian government auctions off the country's valuable 5G spectrum to major telcos, how can retail investors benefit from the move to ultra-fast mobile data?
One way might be investing in the tower networks that 5G will depend on, according to investment firm Ausbil.
Ausbil's Head of Global Listed Infrastructure Tim Humphreys told AAP the demand for 5G technology will be "very high" and up to 10 times more towers will be needed to transmit signals.
"We can't see all the potential uses now but it is clear that the innovation expands to use all of the available technology," he said.
"The amount of applications is going to explode."
The 5G high-band spectrum was put up for auction in 27 Australian regions earlier in April.
On Friday Telstra told the sharemarket it has paid $277 million to secure 1000 MHz of 26 GHz spectrum (mmWave) in the auction, in all major capital cities and regional areas where it was up for sale.
Telstra says it has achieved download speeds of 5 Gbps in recent mmWave tests, after its first compatible devices were launched in May 2020.
The company's 5G coverage is expected to reach 75 per cent of the population by June 2021.
Telstra CEO Andrew Penn says 5G technology is a huge step forward.
"Imagine watching the grand final at the Melbourne Cricket Ground, with your 5G-powered augmented reality goggles overlaying real time player stats, all at the same time as thousands of others are enjoying the game alongside you - that's the immense bandwidth and speed that mmWave can offer," he said in a statement.
But because 5G uses higher frequencies, its waves can't travel as far as 4G data, and so more towers are needed to provide 5G coverage.
Mr Humphreys says as phone network operators race to launch the fastest 5G services, physical assets such as towers are a big opportunity and it's likely they will spin off these assets.
"This is a well-trodden path in the US and Europe," he said.
Telstra's network assets will be spun off into a new corporate entity later in 2021, as part of a major corporate restructure.
Telstra and Optus began their 5G rollout in 2020 but haven't been able to deliver promised speeds so far, because they still need more towers to transmit the 5G signals.
And while many see 5G as an existential threat to the National Broadband Network, Mr Humphreys believes the two systems are complementary.
"Our analysis suggests 5G will not have a material impact on NBN, the two can operate in symmetry rather than competing," he said.
Ausbil Investment Management Limited manages more than $13 billion in Australian and global equities and is owned by New York Life Investment Management.
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