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Ericsson & Orange Augment Automated Operational Services

Zacks Equity Research

Reinforcing the long-term partnership, Ericsson ERIC recently secured a three-year contract extension from French telecommunications firm, Orange, for the deployment of its AI operating model — Ericsson Operations Engine. This partnership reflects Ericsson’s efforts to promote disruptive technology for enhanced customer experience.

The high-end operating model is specifically designed to meet the burgeoning demands of increased network complexity by enabling service providers to reduce costs, drive network efficiency, boost productivity and pave the path for innovation as the industry migrates to 5G and IoT. It consists of an end-to-end data-driven process, which allows organizations to work seamlessly between different applications, thereby driving new levels of network performance, flexibility and scalability.

Per the deal, which is extendable up to five years, the Swedish telecom equipment maker will deploy its automated operational services to nearly 40 million users in five European countries — Belgium, Moldova, Romania, Slovakia and Spain. It will also provide adequate network operations and maintenance services for enhancing Orange’s 2G, 3G, 4G and 5G access.

Three years back, Ericsson had collaborated with Orange for the development and testing of “selected 5G use cases and services,” including technical alignment and external demonstrations. The partnership was part of its three-pronged “core business growth,” the other two being targeted growth and cost and efficiency program. A couple of months back, both the companies collaborated to launch a 4G network in Sierra Leone, leveraging Ericsson’s Radio System technology to deliver fast and reliable 4G access. The companies also intend to work on other critical areas, such as Software Defined Network and Network Function Virtualization to upgrade existing 4G networks to 5G.

With the emergence of the smartphone market and subsequent usage of mobile broadband, Ericsson, being one of the premier telecom service providers, is much in demand among the operators to expand network coverage for higher speed and capacity. The company is focusing on structural changes that will help generate lasting efficiency gains and boost cost competitiveness. Markedly, the company is the world’s largest supplier of LTE technology with a huge market share. It continues to execute its strategy, and is well on track to achieve its 2020 financial goals with a comprehensive 5G-ready portfolio to enable seamless migration to 5G technology. AI and automation are key enablers for its future business development, creating customer and shareholder value.

As 5G devices increasingly become available, more than 10 million subscriptions are estimated globally by the end of 2019. The telecom equipment maker has also been working with operators to help in network modernization, while optimizing plenty of opportunities to position itself for market leadership.

Backed by inherent growth potential, the stock has gained 2.2% compared with the industry’s rise of 21.8% in the year-to-date period.

Zacks Rank & Stocks to Consider

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

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

Qualcomm exceeded the Zacks Consensus Estimate in each of the trailing four quarters, the average positive earnings surprise being 8.7%.

Ubiquiti outpaced estimates thrice in the preceding four quarters, the average positive earnings surprise being 16.1%.

PCTEL exceeded estimates in each of the trailing four quarters, the average positive earnings surprise being 150.6%.

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