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Ericsson (ERIC) Rolls Out Standalone 5G Network Facilities

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Zacks Equity Research
·4 min read
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Ericsson ERIC recently 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.

Notably, 5G networks were until now deployed mostly in Non-standalone (NSA) mode, whereby 5G network availability was dependent on the underlying LTE network for signaling support. The Standalone 5G NR software eliminates this 4G dependency by enabling carriers to augment their network capabilities with a simpler architecture. Moreover, it improves network speed and simplifies mobility management with seamless access to wide 5G bands for better user experience.

Impressively, all Ericsson Radio Systems deployed since 2015 could be upgraded to the Standalone mode with the installation of a software. This, in turn, will likely facilitate service providers to deploy 5G services to business enterprises for improved operational efficiencies with low latency and fast response times.

The Ericsson Radio System comprises hardware, software and services for radio, RAN Compute, antenna system, transport, power and site solutions. It enables smooth and cost-effective migration from 4G to 5G, supporting communications service providers to launch the avant-garde technology and grow 5G coverage faster. The company’s 5G radio access technologies provide the infrastructure required to meet the growing demand for high-bandwidth connections and support the real-time, low-latency, high-reliability communication requirements of mission-critical applications.

Ericsson has completed Standalone 5G interoperability with key ecosystem partners, with T-Mobile US, Inc. TMUS and Telstra Corporation Limited TLSYY being the leading partners that have already trailed the solution on their commercial networks. Standalone 5G devices are expected to become available later this year, complementing the company’s end-to-end Standalone 5G solution.

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.

Notably, Ericsson has secured more than 93 commercial 5G agreements with unique communication service providers, of which 40 are live networks. The company is increasingly focusing on 5G system development to capitalize on the upcoming market opportunities. The company believes that standardization of 5G is the cornerstone for the digitization of industries and broadband. Moreover, Ericsson foresees mainstream 4G offerings to give way to 5G technology in the future.

Meanwhile, the impending deployment of 5G networks is expected to boost the adoption of IoT devices, with technologies like network slicing gaining 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 lost 1% in the past year compared with the industry’s decline of 0.2%.

We are impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock. Another same-ranked stock in the industry is Juniper Networks, Inc. JNPR. 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%.

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