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Ericsson Boosts 5G Network in Sweden With Telia Partnership

Ericsson ERIC recently announced its collaboration with leading Sweden-based communications service provider — Telia Company — to deploy first 5G commercial network in Stockholm City Center. Financial terms of the contract were not disclosed by the parties. Markedly, the latest partnership is likely to enable the wireless service provider to smoothly transition from 4G to the super-fast 5G technology, leveraging on the technological prowess of Ericsson. As the sole supplier of 5G radio access network (RAN), the move will enable Ericsson to capitalize on its best-in-class capabilities in wireless core services platform.

Ericsson's 5G NR RAN is an integral component of its 5G platform and includes software support for migration from LTE (a 4G mobile communications standard) to NR (a global 5G standard). It offers an industry-leading performance on the smallest site footprint with the lowest energy consumption as networks grow in scale and complexity. The company’s 5G radio access technologies provide the infrastructure required to meet growing demand for high-bandwidth connections and support the real-time, low-latency and high-reliability communication requirements of mission-critical applications.

Per the deal, Telia Company will leverage Ericsson’s 5G NR hardware and software to deploy its avant-garde 5G network in Sweden. Further, the operator will also utilize its mid- and high-bands along with new radio technology-backed carrier aggregation and LTE network to provide seamless 5G connectivity with 700 MHz spectrum. Markedly, the partnership will enable the companies to enhance their existing consumer business with greater flexibility as well as reliability. Apart from being energy and cost efficient, the technology will also be used in various sectors such as healthcare, transport and entertainment. Currently available in Stockholm, the 5G coverage will be expanded to other Swedish districts such as Östermalm, Norrmalm and Vasastan by mid-June.

Notably, the 5G network has been specifically designed to provide a premium experience to consumers and enterprises as well as accelerate applications for various industries across Sweden. Few days back, the Swedish telecom equipment maker had collaborated with Telia Norway to deploy first 5G commercial network in the greater Oslo region. In 2019, the companies partnered with Volvo Construction equipment to deploy 5G-backed automated solutions for industrial use. Primarily, 5G is touted to create opportunities for Telia Company in industry and digital partnerships that will allow Sweden to compete in technology innovation. Consequently, these endeavors serve as a testimony to its long-standing partnership with Telia Company.

Considering growth in the smartphone market and the subsequent usage of mobile broadband, user demand for coverage speed and quality has increased exponentially. Further, to maintain performance with increased traffic, network tuning and optimization is mandatory. Ericsson, being one of the premier telecom service providers, is in demand among operators to expand network coverage and upgrade networks for higher speed and capacity. Notably, it is the world’s largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide.

To date, Ericsson has secured 91 commercial 5G agreements with unique communication service providers, of which 39 are live networks. The company is increasingly focusing on 5G system development to capitalize on the upcoming market opportunities. The company believes that standardization of 5G is the cornerstone for digitization of industries and broadband. Moreover, Ericsson foresees mainstream 4G offerings to give way to 5G technology in the future. In Networks, the company’s ongoing activities include investments in R&D to safeguard a leading product portfolio and cost leadership; higher investments in automation and serviceability, while lowering costs; and selectively gain market shares led by technology and cost competitiveness.

The company’s “cost and efficiency program” has been devised to generate higher cost savings. Ericsson is focusing on structural changes that will generate lasting efficiency gains and boost cost competitiveness. It is also focusing on stabilizing its IT, cloud and project portfolio as well as and re-establishing profitability in managed services by managing existing contracts and investing in automation.

Further, the company is on track with its 2020 and 2022 financial targets while strengthening business in the long term. It has invested in R&D and supply chain capacity to increase market share. The company continues to focus on a restructuring plan to cut costs and streamline focus areas as well as explore options for the media business.

Ericsson currently carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 25.9%. The stock has lost 11.5% compared with 2.7% decline of the industry in the past year.



Some other top-ranked stocks in the broader industry are InterDigital, Inc. IDCC, Comtech Telecommunications Corp. CMTL and Ooma, Inc. OOMA. While InterDigital sports a Zacks Rank #1 (Strong Buy), Comtech and Ooma carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

InterDigital’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 99.5%, on average.

Comtech’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 85.9%, on average.

Ooma’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 124.1%, on average.

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