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Ericsson (ERIC - Analyst Report) and Mobile TeleSystems (MTS - ETF report) recently announced that they have entered into a three-year strategic deal to develop Information Communication Technology (ICT) infrastructure for an LTE network to be launched at the 2013, 17th St. Petersburg International Economic Forum. The contract will commence operations from the second quarter of 2013. Financial terms of the deal were not disclosed.      

Ericsson will install the LTE network primarily in four regions including Siberia, Ural, Volga, and Southern Federal Districts of Russia. With Ericsson’s LTE technology covering half of Russia, the company would become MTS’ primary vendor for LTE network.     

The LTE network will boost Russia’s connectivity as well as the economy. The regions that are covered under the LTE technology are important industrial hubs for key sectors such as mining, engineering, processing and farming.   

As per the agreement, Ericsson will be providing at least 10,000 new-generation products from the RBS 6000 series. In addition, Ericsson will also deliver core network hardware and services in these regions and in the Northwestern Federal District. Ericsson and MTS will also expand their cooperation to enhance 2G/3G networks in several regions in Russia.

The strategic agreement with MTS comes at an opportune time for Ericsson, as there is a very high demand for innovative services and mobile broadband in Russia. Going forward, MTS plans to set up 4G networks in Russia to offer subscribers with high-speed data services by the end of 2013.  

To date, Ericsson has established about 150 LTE networks worldwide and has made communication easier and more convenient by providing high-speed data for mobile phones and data terminals. Recently, Ericsson received a contract from Entel, a Chile-based telecom company, to provide 4G/LTE network to its operators.

Ericsson currently has a Zacks Rank #3 (Hold). Some other players operating in the same industry Ubiquiti Networks Inc. (UBNT), ShoreTel Inc. (SHOR - Snapshot Report), both having a Zacks Rank #1 (Strong Buy). 

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