The 5G hype period appears to be in for a rude awakening with killer apps remaining elusive and additional revenue for carriers hard to come by, according to a new report from Moody’s.

Wireless carriers have invested heavily in 5G network infrastructure upgrades and while some operators are further along than others, the credit rating and financial analysis firm concludes global carriers’ capex will continue to rise through 2025.

Wireless carriers’ capex as a share of revenue leveled off at 16% globally in 2019 and 2020, inched up to 17% in 2021, and is expected to hit 18% for the next four years, according to Moody’s.

The burden on carrier capex is bad enough, but it’s worsened by a prolonged period of lackluster revenue growth. Rising costs and flat revenue portends a rough four-year stretch for operators, and there’s little to suggest that dynamic will change in 2026.

“We remain skeptical about the ability to generate revenue from applications based on 5G technology,” Moody’s analysts wrote in a research note. “We do not expect material revenue increases in the global telecom sector from 5G in the 2022-2025 period. This is because 5G will mainly evolve around enhanced mobile broadband, which will be broadly similar to 4G.”

True 5G Killer App Yet to Emerge

Moreover, with a true 5G killer app yet to emerge, the potential for revenue growth remains scant.

As such, lower latency remains the key improvement delivered by 5G and, while the changes there are noteworthy, the “almost immediate network response time” is only relevant in specialized use cases, according to Moody’s. “Indeed, it has become apparent that the most compelling use cases for 5G revolve around businesses rather than residential consumers,” the analysts wrote.

The largely unmet promise of 5G also follows previous disappointments for carriers in the 3G and 4G eras.

“This phase carries the greatest uncertainty about companies’ capital spending. As a result, we remain cautious when projecting revenue growth derived from 5G until there is clarity on the business case, especially given the lessons of limited monetization of 4G and 3G,” Moody’s analysts wrote.

Specialized services for enterprises continue to be the most compelling use cases for 5G, and additional IoT applications could drive incremental revenue gains after 2025 but those are unlikely to justify carriers’ significant 5G investments, the financial research firm concluded.

“The wide array of potential applications — such as autonomous vehicles, robotics, and smart homes — places different demands on networks in terms of speed and latency, in contrast to previous generations that focused on one major advance, such as broadband mobile video with 4G or web browsing with 3G,” the analysts wrote.

Despite this uncertain revenue outlook, carriers face an unavoidable period of heightened 5G investment. Operators have cumulatively spent $200 billion globally on 5G spectrum to date, according to Moody’s, and GSMA predicts operators will invest about $510 billion on 5G-related infrastructure and services from 2022 to 2025.