Ericsson ERIC recently secured a contract for an undisclosed amount to deploy private mobile networks across three airports in Paris, France. The deal will enable the company to facilitate a seamless transition to Industry 4.0 that will likely help make processes less wasteful, production lines more flexible and productivity higher through industrial automation.
A private cellular network refers to a local mobile network comprising cell sites and core network servers. It aims to supplement the connectivity requirements of a business enterprise by plugging the cellular performance gaps of an existing public network. This dedicated business network allows businesses to interconnect using 4G or 5G technology with secure and reliable connectivity to support mission-critical applications. This, in turn, helps businesses in various industries, dealing with sensor data monitoring, location and tracking, robotics, augmented reality and connected workers such as airports, factories, warehouses or ports, enjoy improved connectivity that is ultra secure compared with a public mobile network.
Leveraging such enhanced capabilities, Groupe ADP, Hub One and Air France have decided to utilize Ericsson’s state-of-the-art technologies to deploy a private mobile network covering Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget airports. This private mobile network will serve a professional ecosystem of more than 120,000 people who work at the three airports on a daily basis.
Ericsson’s equipment will augment terminal operations with new wireless sensors and IoT devices and utilize 5G to stream high-definition security video and edge computing to process streams in real-time. In addition, the equipment will offer superior wireless connectivity to the airport ecosystem for voice and data communication, while streamlining billing, charging, settlement and customer care to monetize ecosystem relationships. While the network will be effective across all outdoor spaces at the airports by the end of 2020, the indoors will become operational by the end of 2021.
Notably, Ericsson has achieved a significant milestone with the commercial availability of its Standalone 5G NR software for service providers in the 5G mid and low bands. With this, the company has taken the next big step in the evolution of the 5G ecosystem to make it more pervasive across the globe. Ericsson currently has 97 commercial 5G agreements with operators (of which 55 are publicly stated) and includes 45 live 5G networks on four continents.
Owing to the wide proliferation of the smartphone market and subsequent usage of mobile broadband, user demand for coverage speed and quality has increased. Further, to maintain a superior performance with traffic increases, there is a continuous need for network tuning and optimization. Ericsson, being one of the premier telecom service providers, is much in demand among operators to expand network coverage and upgrade networks for higher speed and capacity. The Sweden-based telecommunications equipment provider is arguably the world’s largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide.
The company continues to focus on its restructuring plan to cut costs and streamline focus areas, as well as explore options for the media business. Ericsson’s “cost and efficiency program” has been devised to generate higher cost savings. The company is focusing on structural changes that will help generate lasting efficiency gains and boost cost competitiveness. It intends to increase investments in certain core areas to develop the product portfolio. Ericsson is also focusing on stabilizing its IT, cloud and project portfolio, and re-establishing profitability in managed services by managing its existing contracts as well as investing in automation.
Meanwhile, the impending deployment of 5G networks is expected to boost the adoption of IoT devices, with technologies like network slicing gaining more prominence. Currently, Ericsson is investing in its competitive 5G-ready portfolio to enable customers to seamlessly migrate to 5G. AI and automation remain key enablers for its business development, while recurrent contracts ensure a steady revenue stream.
The stock has gained 7.1% in the past six months against the industry’s decline of 3.6%.
We are impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock. Some other similar-ranked stocks in the industry are Juniper Networks, Inc. JNPR, Nokia Corporation NOK and Cogent Communications Holdings, Inc. CCOI. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Juniper has a long-term earnings growth expectation of 8%.
Nokia has a long-term earnings growth expectation of 15.6%. It delivered a positive earnings surprise of 129.1%, on average, in the trailing four quarters.
Cogent has a long-term earnings growth expectation of 10.6%. It delivered a positive earnings surprise of 12.3%, on average, in the trailing four quarters.
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