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Ericsson (ERIC) Expands 5G Collaboration With China Mobile
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Ericsson (ERIC - Free Report) secured a 5G contract from China Mobile, including a 5G radio access network (RAN) and 5G core components for the second phase of the operator’s nationwide rollout. Financial terms of the contract were not disclosed by the parties. The Sweden-based telecom gear maker currently has 91 commercial 5G agreements (of which 45 are publicly announced) and includes 32 live 5G networks on four continents.
According to this new deal, China Mobile stretches its 5G RAN partnership with Ericsson to 17 provinces. The collaboration will see the deployment of Ericsson Radio System products and solutions. Ericsson Radio System comprises hardware, software and services for radio, RAN Compute, antenna system, transport, power as well as site solutions. It enables smooth and cost-effective migration from 4G to 5G, while supporting communications service providers to launch cutting-edge technology.
The company’s 5G radio access technologies provide the infrastructure required to meet growing demand for high-bandwidth connections and support real-time, high-reliability communication requirements of mission-critical applications. Moreover, Ericsson will provide 5G core network equipment in two major regions, covering five provinces. The company is also providing Cloud VoLTE, Cloud Unified Data Management and Policy.
Ericsson has a long-standing partnership with China Mobile that spans almost 30 years of mobile technology. Ericsson is seeing healthy momentum in its business, courtesy of its strategy to increase investments for technology leadership, including 5G. In Networks, the company’s ongoing activities include investments in R&D to safeguard a leading product portfolio and cost leadership; increase investments in automation and serviceability, while lowering costs; and selectively gain market shares led by technology and cost competitiveness.
Ericsson is positive on the longer-term outlook, but the second quarter of 2020 is likely to be a tad softer than normal due to the timing of strategic contracts and uncertainty induced by COVID-19. Nevertheless, with current visibility, it maintains the financial targets for 2020 and 2022. The targets for 2020 take into account an increasing share of strategic contracts, including 5G in China. The acquired antenna and filter business is expected to hurt Networks’ margins in 2020, with a gradual improvement during the second half.
The approved operator merger in North America is expected to build an even stronger 5G momentum and investments are expected to intensify during the second half of the year. However, Ericsson’s managed services contract is expected to be negatively impacted over time, starting the second quarter. Improvements in Digital Services continue, but earnings will vary between quarters depending on the business mix and sales seasonality. In Managed Services, investments in automation and AI will continue to contribute to the gross margin. There will be quarterly variations depending on the timing of add-on sales and costs.
Ericsson has a long-term earnings growth expectation of 25.9%.
Other prominent players in the industry include Nokia Corporation (NOK - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and Juniper Networks, Inc. (JNPR - Free Report) .
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Ericsson (ERIC) Expands 5G Collaboration With China Mobile
Ericsson (ERIC - Free Report) secured a 5G contract from China Mobile, including a 5G radio access network (RAN) and 5G core components for the second phase of the operator’s nationwide rollout. Financial terms of the contract were not disclosed by the parties. The Sweden-based telecom gear maker currently has 91 commercial 5G agreements (of which 45 are publicly announced) and includes 32 live 5G networks on four continents.
According to this new deal, China Mobile stretches its 5G RAN partnership with Ericsson to 17 provinces. The collaboration will see the deployment of Ericsson Radio System products and solutions. Ericsson Radio System comprises hardware, software and services for radio, RAN Compute, antenna system, transport, power as well as site solutions. It enables smooth and cost-effective migration from 4G to 5G, while supporting communications service providers to launch cutting-edge technology.
The company’s 5G radio access technologies provide the infrastructure required to meet growing demand for high-bandwidth connections and support real-time, high-reliability communication requirements of mission-critical applications. Moreover, Ericsson will provide 5G core network equipment in two major regions, covering five provinces. The company is also providing Cloud VoLTE, Cloud Unified Data Management and Policy.
Ericsson has a long-standing partnership with China Mobile that spans almost 30 years of mobile technology. Ericsson is seeing healthy momentum in its business, courtesy of its strategy to increase investments for technology leadership, including 5G. In Networks, the company’s ongoing activities include investments in R&D to safeguard a leading product portfolio and cost leadership; increase investments in automation and serviceability, while lowering costs; and selectively gain market shares led by technology and cost competitiveness.
Ericsson is positive on the longer-term outlook, but the second quarter of 2020 is likely to be a tad softer than normal due to the timing of strategic contracts and uncertainty induced by COVID-19. Nevertheless, with current visibility, it maintains the financial targets for 2020 and 2022. The targets for 2020 take into account an increasing share of strategic contracts, including 5G in China. The acquired antenna and filter business is expected to hurt Networks’ margins in 2020, with a gradual improvement during the second half.
The approved operator merger in North America is expected to build an even stronger 5G momentum and investments are expected to intensify during the second half of the year. However, Ericsson’s managed services contract is expected to be negatively impacted over time, starting the second quarter. Improvements in Digital Services continue, but earnings will vary between quarters depending on the business mix and sales seasonality. In Managed Services, investments in automation and AI will continue to contribute to the gross margin. There will be quarterly variations depending on the timing of add-on sales and costs.
Ericsson has a long-term earnings growth expectation of 25.9%.
Other prominent players in the industry include Nokia Corporation (NOK - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and Juniper Networks, Inc. (JNPR - Free Report) .
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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