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Ericsson to Support Rural Wireless Internet Service Providers

Zacks Equity Research

Ericsson ERIC recently collaborated with Xtreme Enterprises to offer support services to rural Wireless Internet Service Providers (WISPs) across the United States. Per the deal, Ericsson will provide its industry-leading radio system for use across Xtreme Enterprises' network solution and service portfolio to deliver stable broadband speed and reliability of data usage.

Over the years, Xtreme Enterprises – a Pennsylvania-based Internet connectivity services provider – has carved a niche market for providing network capabilities to WISPs. With Ericsson’s state-of-the-art LTE equipment, it aims to facilitate the WISPs to extend coverage by reaching more customers with higher speeds. In particular, it will offer Ericsson's Micro Radio 2208, which delivers the highest allowable power output for outdoor deployments, for Citizens Broadband Radio Service.

Ericsson Micro Radio 2208 ensures robust, wide-area coverage and capacity. Notably, the radio system comprises hardware, software and services for radio, antenna system, transport, power, enclosure and site solutions. It provides the required infrastructure to support the burgeoning demand for high-bandwidth connections and supports real-time, high-reliability communication requirements of mission-critical applications.

Buoyed by the strategic partnership, Ericsson aims to reach various underserved markets throughout the country and fill the void created by the trade restrictions on Huawei equipment. With the emergence of the smartphone market and subsequent usage of mobile broadband, user demand for coverage speed and quality has increased in recent times. Further, to maintain superior performance as traffic increases, there is also a continuous need for network tuning and optimization. Ericsson, being one of the premier telecom services providers, is much in demand among operators to expand network coverage and upgrade networks for higher speed and capacity. Notably, Ericsson is the world’s largest supplier of LTE technology with a huge market share. Also, it has established a large number of LTE networks worldwide.

Ericsson is actively pursuing three key areas — core business expansion, targeted growth, and cost and efficiency to fuel growth. The company maintains strong control of its cost position to stay competitive. AI and automation remain key enablers for its future business development. Ericsson remains confident of reaching its long-term target of at least 12% operating margin beyond 2020.

Despite the inherent growth potential, Ericsson’s shares have lost 4.6% against the industry’s growth of 17.3% year to date. Favorable industry trends are likely to boost its long-term growth and profitability. The company intends to accelerate its planned cost cuts and efficiency measures.


 

Ericsson currently has Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry are PCTEL, Inc. PCTI, Nokia Corp. NOK and Viavi Solutions Inc. VIAV, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PCTEL surpassed earnings estimates thrice in the trailing four quarters, the average surprise being 146.4%.

Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.

Viavi surpassed earnings estimates thrice in the trailing four quarters, the average surprise being 14.5%.

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