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Warren Buffett: Invest in 5G Now

Andrew Button
·4 min read
5G chip

Warren Buffett is betting big on 5G technology.

That’s the takeaway from Berkshire Hathaway’s (NYSE:BRK.A)(NYSE:BRK.B) latest 13-F filing, filed on February 16, which showed several positions in 5G stocks. These included telcos delivering 5G service and tech companies that make 5G phones. If you’re a long-time Buffett follower, you can probably guess what the latter consists of. Hint: it starts with an a. As for the telco bets, one of those is totally new.

Overall, Buffett’s fourth-quarter investments signaled increasing bullishness on 5G. In this article, I’ll explore what those investments were and then highlight a Canadian company that resembles two of Buffett’s U.S.-based 5G plays.

Warren Buffett’s 5G investments

In the fourth quarter, Warren Buffett held at least three stocks that could be considered 5G plays:

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  • Verizon (NYSE:VZ)

  • T-Mobile

  • Apple

The last of those will be familiar to most Buffett fans. A long-time Buffett favourite, Apple is currently Berkshire Hathaway’s single biggest holding. The Apple stake was actually reduced slightly in Q4, but the T-Mobile position increased. Verizon was a totally new bet for Buffett. It’s this investment more than any other that signals Warren Buffett’s bullishness on 5G tech. With 230 million 5G subscribers nationwide, VZ is a leader in 5G infrastructure. It’s quite likely that Verizon’s 5G leadership was part of Buffett’s thesis on the stock, because the speed of the company’s 5G network is among its biggest selling points. The similarity with T-Mobile further corroborates the idea that Verizon was essentially a 5G bet on Buffett’s part.

With that established, we can now turn to a Canadian company that has become a 5G leader in its own right.

A Canadian 5G stock worth buying

If you’re looking for a Canadian 5G leader, there’s no question who is currently in first place: Rogers Communications (TSX:RCI.B)(NYSE:RCI). It currently has the nation’s largest 5G network, with infrastructure in place in 150 localities. Note that I said “infrastructure,” not service. Just because a telco has 5G infrastructure in a city doesn’t mean that customers there can actually use it.

According to Rogers’s website, customers on its Infinite plan can currently access 5G in most of its 150 cities and towns. If that’s true, then Rogers has wider 5G availability than any other Canadian carrier.

It should be noted that telcos in general have been accused of exaggerating the extent of their 5G service availability. For example, an independent review found that Verizon’s ads heavily implied the company was already offering 5G service, when, in fact, it was only building the infrastructure. That’s something investors will want to keep a close eye on. However, Rogers’s claims of having Canada’s largest 5G network don’t appear to be contested. All of Rogers’s competitors claim fewer than 150 cities, and none of them have complained about Rogers’s statements. Given this, it seems likely that Rogers is indeed Canada’s 5G leader. If so, its stock could be a great way to play the future of 5G technology in Canada — much like Warren Buffett is betting on the future of 5G in the U.S.

The post Warren Buffett: Invest in 5G Now appeared first on The Motley Fool Canada.

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Fool contributor Andrew Button has no position in any of the stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV, T-Mobile US, and Verizon Communications and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares), short March 2021 $225 calls on Berkshire Hathaway (B shares), and long January 2023 $200 calls on Berkshire Hathaway (B shares).

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