Ericsson, T-Mobile Ink Billing Deal

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Ericsson (ERIC) has inked a three-year contract with Poland based T-Mobile for application development and maintenance of the latter’s billing system. The financial details of the contract were not disclosed. Following the announcement of the contract with T-Mobile, Ericsson’s share rose 2.2% to close at $11.90 on May 28, 2013.

T-Mobile’s contract with Ericsson comes at a time when there is a significant increase in mobile broadband users in Poland. The steady surge in usage has compelled the network operators to continuously introduce new offerings and services to meet subscribers’ demands. The operators need to establish more concrete internal operations that align the business processes with the technological developments.

The billing solution offered by Ericsson will facilitate instant changes to the current offerings, rates and billing procedures. In addition, it will also enable comprehensive customer care capabilities and will serve 16 million T-Mobile users.     

Ericsson and T-Mobile have been working together for approximately two decades. T-Mobile had earlier opted for Ericsson’s billing system BSCS iX.

Ericsson has been receiving a number of contracts from major mobile operators globally. Bharti Airtel had selected Ericsson’s Intelligent Modernization Network Solution for its prepaid subscribers, banking on which the global telecommunication operator could offer flexible data plans to prepaid customers and thereby enhancing customer experience by flexible bundling and real-time control of chargeable services. Ericsson had received another contract from India’s Reliance Communications worth $1 billion for managed services to operate and manage the wireline and wireless networks in the Northern and Western States of India. Apart from these, Ericsson received a contract from Entel, a Chile-based telecom company, to provide 4G/LTE network to its operators.

Thus, with these contracts on board, Ericsson is fully aligned to achieve its long-term objective of expanding its base and operations in the emerging markets. Given the favorable scenario, we expect Ericsson stock to experience a revision and show a rising trend in the coming quarters.

Ericsson currently has a Zacks Rank #3 (Hold). Other players operating in the same industry such as Ubiquiti Networks Inc. (UBNT), ShoreTel Inc. (SHOR) carry a Zacks Rank #1 (Strong Buy) and Interdigital Inc. (IDCC) having a Zacks Rank # 2 (Buy) are worth considering.

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