Ericsson-BCE Unit Collaborate to Boost 5G Network in Canada

To support Canada-based citizens with seamless 5G connectivity, Ericsson ERIC recently announced that it has inked an agreement with a leading communications service provider — Bell Canada — to deploy nationwide 5G network with the former’s Radio System infrastructure. Bell Canada is the wireless wing of BCE Inc. BCE. Markedly, the collaboration is likely to aid the Canada-based wireless service provider to bridge the digital gap for a seamless access to 5G technology. As an existing supplier of 4G LTE wireless technology to Bell, the move will enable Ericsson to capitalize on its best-in-class capabilities in wireless core services platform, thereby fortifying its position in the Canadian markets. However, financial terms of the deal were not disclosed by the parties.

Specifically designed for sustainable networks, the Swedish equipment maker’s Radio System technology provides a complete platform required for the establishment of scalable Radio Access Network (RAN). Notably, the Radio System software is equipped with state-of-the-art technology that adjusts to all types of traffic scenarios ranging from 2G to 5G. Ericsson’s 5G NR RAN is an integral component of its 5G platform and includes software support for migration from LTE (a 4G mobile communications standard) to NR (a global 5G standard). It offers an industry-leading performance on the smallest site footprint with the lowest energy consumption as networks grow in scale and complexity.

Per the agreement, Bell Canada will leverage Ericsson’s 5G NR hardware, software and radio access technologies to strengthen the infrastructure required to meet growing demand for high-bandwidth connections and support real-time, low-latency and high-reliability communication requirements of mission-critical applications. Currently, Bell is working with multiple equipment suppliers for its 5G rollout. This multi-vendor strategy has been a key enabler for enhancing Bell’s 5G infrastructure, especially as the economy opens up amid the COVID-19 crisis. Ericsson will also support the Canadian company for the rollout of 5G-backed Wireless Home Internet service in the rural areas in future. Markedly, this 5G deployment will come into effect following the auction of 3.5 GHz spectrum by Canada’s government at the end of 2020.

To date, Ericsson has secured 93 commercial 5G agreements with unique communication service providers, of which 40 are live networks. The company is witnessing healthy momentum in its business, based on the strategy to increase investments for technology leadership, including 5G. Its mobility report predicts 1.9 billion mobile 5G subscriptions globally by the end of 2024, up from 1.5 billion subscriptions in 2018. 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.

The company’s ‘cost and efficiency program’ has been devised to generate higher cost savings. Ericsson is focusing on structural changes that will help generate lasting efficiency gains and boost cost competitiveness. It is also focusing on stabilizing its IT, cloud and project portfolio and re-establishing profitability in managed services by managing existing contracts and investing in automation.

Further, the company is on track with its 2020 and 2022 financial targets while strengthening business in the long term. It has invested in R&D and supply chain capacity to increase market share. The company continues to focus on a restructuring plan to cut costs and streamline operations as well as explore options for the media business.

Ericsson currently carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 25.9%. The stock has lost 1.7% against industry’s growth of 3.1% in the past year.

Some other top-ranked stocks in the broader industry are Ooma, Inc. OOMA and InterDigital, Inc. IDCC. While Ooma sports a Zacks Rank #1 (Strong Buy), InterDigital carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ooma’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 228.2%, on average.

InterDigital’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 99.5%, on average.

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