Title: AT&T Ditches Nokia for Ericsson in Telecom Equipment Supplier Swap
In a surprising move, AT&T has decided to replace Nokia with Ericsson as its main supplier for telecommunications equipment. This change comes after AT&T awarded Ericsson a five-year contract worth up to $14 billion to modernize its wireless network infrastructure.
Why the Switch?
AT&T's decision to switch suppliers is part of a broader strategy to renew and expand its network. The telecom giant wants to leverage more hardware and software from niche providers like Corning, Dell, Fujitsu, and Intel. To win the contract, Ericsson agreed to produce equipment in the United States and open its software to rival systems.
Impact on Nokia
Nokia, which previously supplied about a third of AT&T's wireless network, had to adjust its targets after losing the deal. The company's shares slipped in the aftermarket, but they are expected to recover as cost reductions announced earlier partially offset the impact of AT&T's decision. Mobile Networks, the segment that supplied AT&T, still remains profitable.
Impact on Ericsson
Ericsson's shares soared after winning the AT&T contract. The deal has contributed significantly to the company's revenue growth, particularly in North America, where mobile operator network investments have increased by over 50% in the last quarter. The partnership with AT&T gives Ericsson hope for market stability in 2025.
Impact on AT&T
The switch to Ericsson will enable AT&T to modernize its network infrastructure, aiming to cover 70% of its wireless traffic with open RAN platforms by late 2026. This move will enhance network efficiency and support the delivery of new services. The deal with Nokia focuses on integrating AI and machine learning to optimize network performance and enable new voice services.
Interestingly, Sony Ericsson, a former rival in the mobile phone industry, could find new opportunities as AT&T diversifies its hardware and software suppliers. Nokia, on the other hand, will need to adapt to the change and explore potential partnerships with other telecommunications companies to maintain its business momentum.
References:
- ZDNet. (2023, December 26).
- NTV.de. (2023, December 26).
- Reuters. (2023, December 26).
- Mobile World Live. (2023, December 26).
- Light Reading. (2023, December 26).
