Insight

Our growing wireless network consumption

30 July 2020
Ido Cohen
Ido Cohen
Senior Portfolio Manager
Juan Hartsfield
Juan Hartsfield
Portfolio Manager
Our growing wireless network consumption
Invesco Global Consumer Trends Strategy

We have shown in previous sections that our world has become increasingly connected, and the adoption of mobile devices has a large part to play in that trend. We have also highlighted how our media consumption has increasingly shifted towards mobile devices, and the one thing we need to ask ourselves is: how is this trend affecting our wireless network requirements?

Wireless networks were originally built for a voice use case (Figure 8). In the ‘old world’, traffic flows were symmetric – that means the amount of traffic that flowed from the tower to the handset was similar to that which flowed from the handset to the tower: it’s a conversation.

But now that we are consuming media through our smartphones, traffic flow has changed from symmetric to heavily downstream from the tower to the handset. In our view, this is driving up the value of the downstream capacity, and the scarce asset here is the wireless airwaves. The frequencies that wireless companies get capacity from are hard to get, and the ones that are available for downstream are in our view growing in value because of this paradigm.

Figure 1: New smart phone world changing capacity needs
New smart phone world changing capacity needs
Source: Company Reports and Citi Research. For illustrative purposes only. Data available as at 30 September 2014.

Looking ahead, there are also a lot of other use cases that are going to continue to put pressure on this dynamic. Automated vehicles or drones or the Internet of Things in general should all require a lot more capacity from the network.

The Invesco Global Consumer Trends Strategy has exposure to a number of companies with excess wireless licenses that are still undeployed, and which we think are undervalued within those companies.

One of our holdings within the portfolio is Intelsat, which is a Luxembourg-based communications satellite services provider. The company has a portfolio of C-Band spectrum assets that we believe is attractive.1 The use of C-Band frequency ranges has technical and economic advantages to help provide the means to transition away from 4G to 5G, as well as to help manage the increasing mobile broadband capacity constraints.

Additionally, Intelsat is a provider of scarce telecommunications spectrum that is needed to help foster autonomous vehicle communication and connectivity – another long-term growth theme the portfolio is seeking to capitalize from.

1 Spectrum is a broad range of frequencies used to facilitate the transmission data for telecommunications and radio communications.

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