Everything Everywhere only recently launched the UK's first 4G network, but operators, infrastructure providers and the UK Research Partnership Investment Fund are keen to invest in the next generation.
The grant will be used to build a 5G Innovation Centre, according to Surrey University professor Rahim Tafazolli.
"The boundaries between mobile communication and the internet are blurring, so the fifth generation is internet on the move," he told BBC News.
"4G for us is old hat. We started working on 4G ten years ago," he added. "Being a university we have to be one step ahead of industry."
Professor Tafazolli went on to say that 5G technology needs to be more cost-effective than 4G and be capable of handling the rapidly increasing volume of mobile traffic.
"The cost of electricity of running the networks is very high," he explained. "We are facing systems which are too expensive. We need something extremely energy-efficient and cost-efficient."
5G technology is expected to launch in 2020.