Accelerated 5G Buildout in Emerging Markets, Sales Growth Opportunity for Telecom Equipment Makers
As 5G network buildout investments accelerate in emerging markets, global companies supplying telecom equipment and optical communications components face expanding sales opportunities. Modernization demand for telecommunications infrastructure in Southeast Asia, India, and Africa is expected to be a key growth driver for the telecom equipment industry.
Nokia and Ericsson: At the Center of Emerging Markets’ 5G Orders
Nokia (NOK) and Ericsson (ERIC) are leading companies in the global market for 5G radio access network (RAN) and core equipment. As of October 20, 2026, NOK’s closing price was $9.02 and ERIC’s was $10.65.
Recent financial results of both companies reflect emerging market investment opportunities. NOK recorded year-over-year revenue growth of 8.4%, while ERIC achieved 5.8% growth. ERIC’s net profit margin of 8.4% exceeding NOK’s 3.5% demonstrates a cost-efficiency advantage. However, NOK’s P/E ratio of 56.0 compared to ERIC’s 16.7 suggests the market places more confidence in ERIC’s profitability.
Four Drivers of Accelerated 5G Demand in Emerging Markets
1. Expanded Smartphone Penetration and Growing Data Demand: Smartphone adoption rates relative to population are steadily rising in Southeast Asia and India. As the low-cost smartphone market expands, telecommunications demand spreads into rural areas, driving growing need for base station and backhaul infrastructure development.
2. Government-Led Digital Infrastructure Policies: India’s BharatNet project and Southeast Asian countries’ national 5G roadmaps have pledged billions of dollars in government investment. African countries are also advancing 5G spectrum auctions and have made telecommunications infrastructure modernization a national priority.
3. Lower 5G Penetration Compared to Developed Markets: Emerging markets remain in the phase of completing 4G network buildout or are at early stages of 5G deployment. This means sustained 5G equipment orders will continue for years to come. Particularly, the cost of upgrading existing 4G infrastructure to 5G is at the price point that new markets seek, creating increased competitive bidding opportunities for equipment makers.
4. Telecom Operators’ Shift in Capital Allocation: Telecom operators in emerging markets have begun concentrating capital expenditure on 5G infrastructure expansion to improve profitability. Unlike the saturated 5G market in developed countries, 5G rollout in emerging markets remains at an early stage and proceeds in the form of long-term contracts.
Structural Strengths and Risks
Nokia and Ericsson’s Strengths: Both companies played leading roles in developing 3GPP 5G standards and hold numerous patents and technology licenses. Long-standing relationships with existing telecom operators and network integration experience serve as competitive advantages when entering emerging markets.
Competition and Cost Pressures: Chinese telecom equipment makers are expanding market share in emerging markets based on price competitiveness. Additionally, 5G infrastructure development requires substantial upfront capital investment, which may take time to translate into improved profitability.
Conclusion
5G network buildout investment in emerging markets is a long-term trend that presents sales growth opportunities for global telecom equipment makers like Nokia and Ericsson. However, when selecting companies to follow, one must comprehensively review each company’s technological competitiveness, regional customer base, and profitability trends.
This article is for information only and is not investment advice.