I first wrote about Inseego Corp. (Nasdaq: INSG), a maker of telecommunication devices, back in October 2018. At the time, the company had inked a big deal to supply fifth-generation wireless modems to mobile phone makers.
The San Diego-based company was in the news again Monday. It will supply 5G modems to Vodafone Qatar. The announcement led to a 10% gain for shares.
Transformative technologies are the gift that keeps on giving.
Consumers have been awaiting 5G for years. In a mobile-first culture, many naturally assumed they would first see the benefits on their new iPhones. However, Apple, Inc. (Nasdaq: AAPL) waited two years to sell 5G devices, and when that occurred, many buyers complained the slow buildout of infrastructure meant their shiny new smartphones were not much faster than older devices.
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In many ways this is true. Yet … measuring the importance of 5G by smartphone download speeds misses the point … and the larger investment story.
With 5G wireless, providers see the opportunity to bring multi-gigabit speed internet into homes and businesses without the cost of laying expensive fiber. Customers will simply spark up their new 5G routers and, presto, they’ll have connections fast enough to stream high-definition video or seamlessly run home automation software.
5G is not merely an upgrade from 4G/LTE technology. It is orders of magnitude better.
Companies making new radios and silicon have demonstrated download speeds of 50 Gbps, a 1000 times improvement over 4G. A bump of this magnitude would shrink latency to 1 millisecond, from the current LTE standard of 50. Network capacity will improve, too. This is vital for getting a return on the massive infrastructure investment.
Wireless companies will be able to cram more subscribers onto the same network for very little added cost. And they will finally have enough bandwidth to compete with wireline telephone and cable TV providers.
Inseego makes the gateways and modems wireless companies need to make the shift.
The company boasts partnerships with technology leaders like QUALCOMM Inc. (Nasdaq: QCOM). It also has deals with 50 telecommunication service providers, including AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), T-Mobile U.S., Inc. (Nasdaq: TMUS) and BCE Inc. (NYSE: BCE).
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The deal announced with Vodafone Qatar on Monday is relatively modest. The company is putting Inseego 5G hotspots into its phone shops to show off the blazing fast 5G download speeds.
However, investors should not lose sight of the bigger story.
Wireless carriers are going to roll out 5G to homes, businesses and industrial sites.
I wrote two years ago that Inseego shares could easily double on the basis of a steady flow of partners announcing new deals for its 5G gear. At the time, shares traded at $3.80. The stock rallied to $16.50 on Monday before settling at $15.16, up 10.20%.
Investors should use any weakness as a buying opportunity. Shares should continue to move higher as more 5G partnerships are revealed over the next few months.
Best Wishes,
Jon D. Markman
