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Ericsson (ERIC) to Modernize COSMOTE's Network for 5G Era

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Ericsson (ERIC - Free Report) recently announced that it has been chosen by COSMOTE, the largest mobile network operator in Greece, as the sole 5G Radio Access Network (RAN) supplier. Financial terms of this major network modernization deal were not disclosed. The Swedish telecom gear maker currently has 86 commercial 5G agreements with operators, of which 39 are publicly stated, including 27 live 5G networks on four continents.

COSMOTE intends to launch commercial 5G services in 2021. The auction of the 5G spectrum by Greece’s National Telecommunications and Post Commission is expected to take place in fourth-quarter 2020. Ericsson’s 5G RAN products and solutions will be deployed in COSMOTE’s network for a cost-effective migration to 5G. Markedly, the company’s radio access technologies offer the infrastructure needed to meet the increasing demand for high-bandwidth connections and support the real-time, high-reliability communication requirements of mission-critical applications.

Ericsson is seeing healthy momentum in its business, based on the strategy to increase investments for technology leadership. In Networks, the company’s ongoing activities are to invest in R&D to safeguard a leading product portfolio and cost leadership; increase investments in automation and serviceability driving down costs; and selectively gain market shares based on technology and cost competitiveness. Its Radio System extensions deliver an end-to-end 5G access system, which includes the industry’s first global portfolio of 5G New Radio.

Moreover, the company’s radios and basebands will likely improve the carbon footprint of COSMOTE’s current network. Ericsson is committed to creating positive impacts on society through its technology, expertise of employees and partnerships. The company integrates sustainability and corporate responsibility into its strategy to drive business transformation and create value for stakeholders. Its solutions help operators reduce their total cost of ownership while supporting positive social and environmental impacts. The company aims to improve performance across the value chain and differentiate itself from competitors.

5G is touted to create opportunities for COSMOTE in industry and digital partnerships that will allow Greece to compete in technology innovation. Ericsson will work closely with the operator to ensure that they and their customers benefit from this network development. It is on track with its 2020 and 2022 financial targets while making progress toward building a stronger company in the long term. It has invested in R&D and supply chain capacity in an effort to increase market share. The company continues to focus on a restructuring plan to cut costs and streamline focus areas.

Ericsson’s “cost and efficiency program” has been devised to generate higher cost savings. The company is focusing on structural changes that will help generate lasting efficiency gains. It plans to increase investment in core areas to develop a product portfolio. Furthermore, Ericsson is focusing on stabilizing its IT, cloud and project portfolio, and re-establishing profitability in managed services by managing contracts as well as investing in automation.

Ericsson has a long-term earnings growth expectation of 17.7% compared with 14.5% for the industry. The stock has lost 6.9% compared with the industry’s decline of 21.1% in the past six months.

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

Some better-ranked stocks in the industry include Motorola Solutions, Inc. (MSI - Free Report) , Qualcomm Incorporated (QCOM - Free Report) and Ubiquiti Inc. (UI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Motorola topped earnings estimates in the trailing four quarters, the surprise being 6.6%, on average.

Qualcomm surpassed earnings estimates in the trailing four quarters, the beat being 10%, on average.

Ubiquiti topped earnings estimates twice in the trailing four quarters, the positive surprise being 5.7%, on average.

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