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Market segmentation and definition

5G refers to latest generation of mobile internet connectivity. It uses high frequency radio waves to achieve high data rates. Apart from this, the 5G technology is expected to reduce latency, and
promote energy and cost efficiency, excellent connectivity, and very high system capacity.

Segments Definitions

A subscriber identification module (SIM) is an integrated circuit (IC), designed to securely store the international
mobile subscriber identity (IMSI) number and its related key, which are used for identification and authentication
of the subscribers on mobile telephone devices, such as, smartphones, tablets, non-smartphones, and computers,
and its respective cellular network. SIM cards are used on GSM phones, and they are required for newer LTE-
capable handsets.

SIM cellular connections

This refers to the technologies that enable devices/machines and sensors within the Internet Of Things (IoT)
to communicate with each other, and other Internet-enabled devices and systems, without or with minimal
human intervention.

SIM M2M cellular connections

Connected homes Connected healthcare Connected cars Connected cities Mission critical applications

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Executive summary

• Currently, 5G is a crucial component of the global digitally connected ecosystem. It is estimated that between 2019 and 2025, the number of 5G users
will increase by roughly 1.2 Bn, globally. China, the United States (U.S.), Japan, and the majority of European Union (EU) countries will account for 70%
of 5G users by 2025.
• Also, by 2025, it is expected that there will be around 300 Mn 5G enabled SIM M2M connections, and the total expected traffic from 5G enabled
Overview devices will reach 490 exabyte (EB).
• Once it is launched commercially in early 2020, the 5G market will expand at an exponential compound annual growth rate (CAGR) of 97.1% till 2025.

• The ever-increasing demand for an enhanced mobile broadband experience, and the rising penetration of smartphones are a few
critical drivers for faster 5G adoption.
• 5G is the solution for applications that require higher bandwidth. Hence, the demand for new and advanced application services,
and the rising adoption of the Internet of Things (IoT) will propel the 5G market during the forecast period.
251 • Ongoing investments in developing the 5G network will help in faster commercialization of 5G.

XX
XX • 5G will drive network virtualization. Starting from 2019, the increasing number of carriers is expected to deploy virtualized network to
Trends support 5G applications. 5G will usher in a variety of new applications that would not have been possible using 3G/4G. Remote surgeries,
2020 2022 2025 full-fidelity virtual reality (VR), advanced location tracking, and autonomous vehicles are a few examples of these applications.
• Automotive companies will be using 5G to enhance vehicular communication and safety. Enhanced features will include vehicle-to-
USD Bn vehicle (V2V) communication, vehicle-to-pedestrian (V2P) communication, vehicle-to-infrastructure (V2I) communication, and network-
facilitated communication.
• Organizations are looking at 5G to deliver extremely secure network for industrial applications, as security will be a core feature of the 5G
infrastructure.

• New applications like self driving cars and remote surgeries will require reduced latency to ensure smooth operations. Delays can have detrimental
effects on target-oriented applications. Though 5G is expected to deliver an ultra-low latency, however, ensuring smooth functioning of the network will
pose a challenge, at least in the initial phase of deployment.
• With the advent of 5G, it is expected that there will be a massive rise in connected devices. The rising number of such devices along with technological
diversity will put 5G network to test.
• For service providers in developing countries, margins are inadequate, reflecting growth and competitive challenges.

3
Global 5G depiction landscape

By 2025, Asia-Pacific and North America are expected to have the highest share of 5G SIM cellular connections and SIM M2M cellular connections, respectively.

North America Europe

SIM
208 Mn 32.4 GB SIM 257 Mn 23 GB

SIM M2M 146 Mn 5.3 GB SIM M2M 51 Mn 2.8 GB

The Middle East and Africa (MEA)

SIM 81 Mn 28 GB SIM 619 Mn 23 GB

Asia-Pacific (APAC)

Latin America (LATAM)

SIM M2M 9 Mn 3.5 GB SIM M2M 95 Mn 3.3 GB

SIM 52 Mn 16 GB

SIM M2M 2 Mn 1.9 GB Note:

Number of connections

Data consumption
per connection

4
 Global market drivers
IoT connections on the rise
• The number of IoT connections was aimed to
proliferate from 2017 to 2025, reaching 25 Bn
connections by 2025.
• This will be driven mostly by industrial solutions
such as smart factories, smart cities, and industrial
automation. Rise in industrial IoT will be supported
through investor financing, and a supportive
ecosystem.
• These growth prospects are expected to propel the
5G market, since it will be a key enabler for IoT.
High data traffic
• The year 2020 and beyond will witness an explosive
growth in mobile data traffic.
• According to estimates, global mobile data traffic
will grow by more than 200 times from 2010 to
2020, and by nearly 20,000 times from 2010 to
2030. Managing high data traffic necessitates faster
migration to 5G.
Enhanced mobile broadband (EMB) adoption
• Two critical facets of EMB that will drive adoption
and value creation in the 5G economy are:
o Extending cellular coverage to a broader
range of structures like office buildings,
industrial parks, shopping malls, etc.
o Improved capacity to handle a significantly
higher number of devices using high
volumes of data, especially in localized
areas.
Investments in network infrastructure
• Mobile operators are investing in developing 5G
network to support migration to 5G, and driving
customer engagement.
• Between 2018 and 2020, an estimated USD 0.5 Tn in
capital expenditure will fuel the 5G market.
Smartphone adoption
• Smartphone connections, globally, will increase from 2.8 Bn
in 2016 to 5.8 Bn by 2020; 90% of that growth will be coming
from the developing markets.
• China is already the largest smartphone market, but India will
be one of the key regions driving growth.
5
 Global market drivers - enhanced mobile broadband

Consumer demand for a low-latency network and high-speed mobile broadband experience is on the rise. The advent of 5G services will cater to this need across all mobile
devices and interfaces.

Tablets
Global average mobile network
• During the 2016-2021 period, the average network connection speed for tablets
connection speed for all tablets will increase from
(in mbps)
19.1 mbps to 27.8 mbps, expanding at a CAGR of
8%.
27.8
Handsets • According to estimates, the combined number of
26.2 27.2
mobile and tablet users surpassed the number of 19.1 24.5
• During the 2016-2021 period, the average network connection speed desktop users, globally. This trend is expected to 22.6
for all handsets will increase from 6.8 mbps to 20.5 mbps, expanding continue.
at a CAGR of 24%.
• This is mainly due to the feasible interface and
• By 2021, 4G speeds will be nearly double than that of an average mobility provided by such devices.
mobile connection.
• By 2021, an average mobile connection will have speed twice as that 2016 2017 2018 2019 2020 2021
of 3G.

Global average mobile network Smartphones Global average mobile network connection speed for
connection speed for handsets smartphones
20.4 • During the period 2016-2021, the average network 20.3
(in mbps) (in mbps)
connection speed for smartphones increased from
17.7 12.1 mbps to 20.3 mbps, expanding at a CAGR of
12.1 18.1
14.3 11%. 14.9 16.2
6.8 13.5
11.1 • Smartphone users, on an average, spend time
8.7
accessing over 30 apps on a monthly basis, according
to recent survey reports.
2016 2017 2018 2019 2020 2021 • Consumers are turning to smartphone apps and
2016 2017 2018 2019 2020 2021
social media for daily activities.

NOTE:- Download speed, upload speed, and latency characteristics vary widely depending on the type of application, be it video, radio, or instant messaging
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Global market size - SIM cellular connections

Globally, by the end of 2025, it is expected that there will be 9.4 Bn SIM cellular connections. 4G SIM cellular connections will dominate, and the estimated number of 5G SIM cellular
connections will be 1.2 Bn.

SIM cellular connections (Bn) 5G SIM cellular connections (Bn) 4G, 3G, and 2G SIM cellular connections (Bn)
XX
3.3 2.3 2.0 1.8 1.6 1.4 1.3
2G

2.5 2.5 2.6

XX 2.5
XX 2.5 2.5
3G
XX XX XX
XX
XX 2.3 4.5 4.4
4.4 4.5 4G
XX 3.8 4.2

XX
XX 1.8
XX XX
2016 2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2024 2025 2016 2020 2021 2022 2023 2024 2025

Key observations Key observations Key observations

• Globally, the number of SIM cellular connections is
expected to grow from 7.4 Bn in 2016, to around 8.6
Bn by 2020, and 9.4 Bn by 2025, expanding at a CAGR
of 2%.
• The major contributor to the increasing growth will be
the Asia-Pacific region, considering the population and
rate of smartphone adoption.
• The number of 5G SIM cellular connections is
expected to grow from around 20 Mn in 2020 to 1.2
Bn by 2025, worldwide, expanding at a CAGR of 129%.
• By 2025, Asia-Pacific is expected to have about 50% of
the 5G connections, followed by Europe constituting
about 20%, and North America accounting for 17% of
the share.
• Global 4G adoption is expected to become the highest
in the next few years, primarily attributed to the rising
demand for a low-latency network, and high mobile
broadband speed.
• The global 2G connections will witness a decreasing
trend since consumers are switching to faster and
more efficient networks.

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Global market size - SIM M2M cellular connections

By the end of 2025, it is expected that there will be 2.8 Bn SIM M2M cellular connections, worldwide. 5G SIM M2M cellular connections are expected to reach around 300 Mn by 2025.
4G, 3G, and 3G SIM M2M cellular connections are all expected to grow.

SIM M2M cellular connections (Bn) 5G SIM M2M cellular connections (Mn) 4G, 3G, and 2G SIM M2M cellular connections (Mn)

XX 260 448 472 518 594 697 773

XX 2G

717 887
XX 478 587
XX 390 3G
321
XX
XX 119
XX 899
XX
XX 408 539 4G
XX 235 311 700
XX XX
XX 53
2016 2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2024 2025 2016 2020 2021 2022 2023 2024 2025

Key observations Key observations Key observations

• Globally, the number of M2M sim cellular connections
is expected to grow from 0.43 Bn in 2016, to around 1
Bn by 2020, and to 2.8 Bn by 2025, expanding at a
CAGR of 23%.
• The major contributor to the increasing growth will be
the Asia-Pacific region, followed by North America
and Europe having almost equal share of the market.
• Globally, the number of 5G sim cellular connections is
expected to grow from around 3 Mn in 2020 to 304
Mn by 2025, expanding at a CAGR of 159%.
• By 2025, North America is expected to have about
50% of the 5G M2M connection, followed by Asia-
Pacific constituting about 30%, and Europe making
about 17% of the remaining share.
• M2M modules require a different bandwidth
profile based on applications and use case
scenarios.
• As a result, an increasing growth across all types
of M2M connections can be witnessed in the next
few years.

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Global market size – revenue

The global revenue from SIM cellular connections is expected to reach USD 233 Bn by 2025, and revenue from SIM M2M cellular connection is expected to reach around USD 17 Bn by
2025.

Total revenue in USD Bn

233 Key observations

Sim connections

• The global 5G revenue from SIM cellular connections is expected to be

XX
around USD 8 Bn at 2020, and from then onwards is expected to reach
Sim M2M connections USD 233 Bn by 2025, growing at a CAGR of 95%.
• 50% of the global revenue contribution by 2025 is expected to come from
North America, followed by Asia-Pacific and Europe, respectively.

XX

XX Key observations

• The global 5G revenue from SIM cellular M2M connections is expected to

be around USD 200 Mn in 2020, and will reach around USD 17 Bn by
XX 2025, expanding at a CAGR of 152%.
• 60% of the global revenue contribution by 2025 is expected to come from
17.8 North America, followed by Asia-Pacific and Europe.
XX
XX XX
XX XX
XX

2020 2021 2022 2023 2024 2025

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 North America - market trends

North America is expected to witness a rapid change in consumer engagement with mobile devices, and the majority of the traffic generated will come from the use of video files. Companies
will develop strategies and business models in order to generate more revenue from this major trend.

• In North America, 99% of the mobile connections will be 'smart'

connections by 2021, up from 81% in 2016. 1
• In North America, in 2016, the average 4G vs. 3G vs. 2G speed

• Video traffic will be 77% of North America's total mobile data

2 •
was 22,038 kbps vs. 6,180 kbps vs. 150 kbps.
The maximum 5G speed is expected to be 10Gbps.
traffic by 2021, compared to 64% at the end of 2016.
• Videos accounted for almost half of North America's mobile
data traffic by year-end 2015 or earlier.
• Streaming audios will be 5% of North America's total mobile
data traffic by 2021, compared to 7% at the end of 2016.
3
• In the U.S., over 60% of smartphone owners watch online
videos (e.g., YouTube, embedded video, and live streaming
every week), of which 34% do so every day. • Revenue growth in North America has been higher than other
developed markets. This trend has been driven primarily by
4 greater usage of both voice and messaging services, as well as
growing consumer engagement, resulting in higher levels of data
usage.

• In 2016, North America had 127 Mn wearable devices,

accounting for 39% of the global total, and will grow to 378 Mn
by 2021, accounting for 41%. 5

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 Company overview - Vodafone

A British multinational telecommunications company, Vodafone Group PLC has its headquarters in London, the United Kingdom (U.K.). It predominantly operates as a
telecommunications company in the regions of Asia, Africa, Europe, and Oceania.

Key highlights 5G growth strategy and investments

Key personnel Strategy

• The Vodafone Group has partnered with notable equipment providers
• Chief Executive Officer - Vittorio Colao like Huawei, Nokia, Ericsson, Intel, and Qualcomm Technologies, Inc. to
• Chief Financial Officer - Nick Read research 5G technologies, and prepare its networks for a transition
• Chief Commercial Operations and Strategy Officer - Serpil Timuray towards the new mobile standard.
• Vodafone plans to commercialize 5G by 2020 after significant tests and
evaluations over a wide range of technologies, services, and
Major offerings applications.
• The company offers voice, messaging, and data services across mobile
and fixed networks, and converged communication services to small
and large multinational corporations.
• The company also offers IoT to connect machines to the Internet.

Investments
• Vodafone invested around GBP 2 Bn in the network hardware, software
and services over the last couple of years. Another GBP 2 Bn investment
will be pumped during 2016 to 2018 into the existing LTE network and
Key numbers (FY 2017) fibre, making it future-ready for 5G.

• Total revenue: USD 50,931.35 Mn

• Gross profit margin: 27.4%
• Net income margin: 13.2%
• Growth over prior year: 4.4%
• EBITDA margin: 24.2%

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Appendix
Research methodology

The study begins with identifying the right research question(s). The question depends on what we are going to achieve by conducting the research or what we want
to convey to the prospective customers through this research. Next, we identify the logical steps to arrive at the answers to the question(s). These logical steps form
our research objectives. The research objectives provide us a guideline regarding what information we need to conduct analysis. We strongly believe that clear
objectives will lead to clear results about the given market

The next stage of the research is conducted utilizing the secondary sources of information, process called desk/secondary research. Netscribes Inc. has a considerable
volume of information in both quantitative and qualitative forms, across all major industries and its sectors. Also, we conduct in-depth study of the market,
understanding its key stakeholders, drivers, trends, challenges and opportunities globally covering major regions such as North America, Latin America, Europe, Asia
Pacific, and the Middle East and Africa. The key sources consumed for these research include (but not limited to) the following:
 Financial reports published by the key market players
 Government and other official sources including the National Statistics
 National and International trade associations
 Paid databases
 Other reliable sources

Primary research complements the secondary research, as and when required, as it helps us to gain insights from the industries directly by communicating with the
senior executives, key opinion leaders and independent consultants who are experts in their industries or specific industry sectors. Such interviews are conducted
across the value chain of the market in question. A survey questionnaire is usually prepared for conducting any primary interview or survey. The questionnaire is
developed with utmost care to fulfil the key research objectives and also to validate the assumptions about the market. This supplements the information otherwise
unaddressed via secondary research. The primary data collection is done by expert interviewers who have specific industry knowledge. Linguists are hired to conduct
interviews in the respondent’s native language. Some of the primary research methods applied at Netscribes include the following:
 In-depth Interviews
 Executive Interviews
 Expert Panels

The qualitative and quantitative findings from the above stages are brought together by specialists to perform a rigorous analysis. The regional market trends, drivers,
and opportunities obtained during the analysis is compared with regional economic indicators, sector growth rates, population index, etc. to ensure the data
consistency. After ensuring the consistency, these historical and present indicators help us to understand how the market will perform in future. Our proprietary
forecasting model factors in all these indicators to predict the future market accurately.

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