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Ericsson to Modernize MTN South Africa's Network for 5G Era

Ericsson ERIC recently announced that it has been chosen by MTN South Africa, a leading mobile telecommunications company, as a 5G network modernization supplier. Financial terms of the contract remained undisclosed. The Swedish telecom equipment maker currently has more than 70 commercial 5G contracts with communication service providers, of which 23 are live networks.

MTN South Africa is upgrading its core network to support 3GPP-compliant 5G Non-Standalone architecture. Per the agreement, Ericsson will supply 5G products and solutions from its Radio Access Network, transport and core portfolios, with rollout expected to begin in 2020. Notably, the companies are working together to develop 5G use cases and applications that will contribute to the digital transformation of industry verticals.

Ericsson will also upgrade MTN South Africa’s existing LTE and legacy radio access networks as part of a three-year deal inked earlier this year. This is aimed at accelerating the operator’s digitization ambitions in the expanding South African market. Ericsson continues to witness strong momentum in its business, based on the strategy to increase its investments for technology leadership, including 5G.

In Networks business (which accounts for the lion’s share of total sales), the company’s ongoing activities include investing 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.

On Oct 2, 2019, the company completed the acquisition of Kathrein’s antenna and filter business in order to expand its Radio System portfolio with new products and capabilities. Ericsson continues to execute its strategy and is well on track to achieve its 2020 financial goals.

It has been focusing on 5G system development and has undertaken several notable endeavors to position itself for market leadership. The growth in 5G subscriptions is estimated to be the fastest in North America with 63% of projected mobile subscriptions within the next five years, followed by North East Asia with 47% and Europe with 40%.

As 5G devices increasingly become available and more 5G networks go live, more than 10 million subscriptions are estimated globally by the end of 2019. Ericsson has been working with operators to help in their network modernization, while optimizing on plenty of opportunities.

Shares of Ericsson have added 9.6% compared with the industry’s growth of 11.2% in the past three months.

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

Some better-ranked stocks in the industry include Qualcomm Incorporated QCOM, Ubiquiti Inc. UI and Viasat, Inc. VSAT. While Qualcomm and Ubiquiti sport a Zacks Rank #1 (Strong Buy), Viasat carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Qualcomm has long-term earnings growth expectation of 14%.   

Ubiquiti has long-term earnings growth expectation of 9.4%.   

Viasat topped earnings estimates in each of the trailing four quarters, the average surprise being 252%.

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