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ERIC Boosts Three UK's Network With Advanced Solutions: Stock to Gain?

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Ericsson (ERIC - Free Report) recently announced that it has been selected by the British telecommunications company, Three UK, to develop its next-generation, cloud-native core network. This collaborative effort aims to more than triple Three UK’s core capacity to 9 terabits per second (Tbps), positioning the upgraded network as the largest of its kind in Europe.

Digging Deep Into ERIC- Three UK Collaboration

An exponential growth in streaming services, gaming and home broadband has led to a surge in data traffic.  Data usage on Three UK’s network has exploded in recent years, surpassing 2 Tbps in December 2024, fueled by increased demand from Premier League streaming on Amazon Prime and gaming updates. This growth follows a significant milestone reached just over two years ago when the company’s network traffic achieved 1Tbps, a figure that had taken almost two decades to reach. 

Per the collaboration, Three UK’s new cloud-native network will leverage Ericsson’s state-of-the-art dual-mode 5G Core and Cloud Native Infrastructure solutions. Ericsson’s dual-mode 5G core uses one common core network to streamline the introduction and management of new 5G services. This solution enables the evolution of the existing network into a cloud-native core architecture that supports multiple access technologies. It seamlessly integrates Evolved Packet Core and the new 5G Core network functions in a unified software platform, ensuring fast and consistent network performance. This integration supports advanced use cases while maintaining cost efficiency and flexibility. 

Based on four key elements, namely Ericsson’s Cloud Container Distribution (CNCF-certified containers as a service), Software Defined Infrastructure providing efficient hardware management, Operations Management for Cloud Infrastructure and Enhanced VNF Manager, the Cloud Native Infrastructure solution delivers a radically simplified architecture compared to running containers in virtual machines. Additionally, by enabling better hardware utilization with minimal infrastructure overhead, faster and more efficient infrastructure lifecycle management, and simplified deployment and network operations, the solution significantly reduces the total cost of ownership. 

The installation of the cloud-native infrastructure and core network solution is already underway in Three UK's data centers, with partial operations expected by the end of 2025.

Increasing Client Base to Drive ERIC’s Performance

With the emergence of the smartphone market and subsequent usage of mobile broadband, user demand for coverage speed and quality has increased recently. To maintain performance with increased traffic, there is a consistent need for network tuning and optimization. Ericsson is much in demand among operators to expand network coverage and upgrade networks for higher speed and capacity. 

The company is focusing on 5G system development and has undertaken many notable endeavors to position itself for market leadership on 5G. Its innovative solutions are reshaping connectivity across sectors, from enhancing network visibility through advanced 5G deployments to revolutionizing industries with robust IoT innovations. 

With a strong presence in more than 180 countries, the leading provider of communication networks is expected to benefit from the increasing customer base. This will likely enable the company to generate higher revenues in the upcoming quarters. Improved financial performance is likely to propel the stock upward.

ERIC’s Stock Price Performance

Shares of Ericsson have gained 46.2% over the past year compared with the industry’s growth of 26%.

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ERIC’s Zacks Rank and Stocks to Consider

Ericsson currently carries a Zacks Rank #3 (Hold). 

Some better-ranked stocks in the broader industry have been discussed below.

Ubiquiti Inc. (UI - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The company’s highly flexible global business model adapts to changing market dynamics, enabling it to overcome challenges while maximizing growth. Its effective management of a strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%.
 
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%.

IDCC pioneered advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops various advanced technology solutions for digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Workday Inc. (WDAY - Free Report) carries a Zacks Rank #2 at present. In the last reported quarter, it delivered an earnings surprise of 7.36%. 

WDAY is a top supplier of enterprise-level software solutions for the fields of human resources and finance management. The company's cloud-based platform makes it simpler for businesses to offer analytical insights and decision support by integrating finance and human resources into a single system.


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