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Ericsson Supports DIGI for Commercial 5G Network in Romania

Zacks Equity Research

Ericsson ERIC recently announced that in concert with RCS & RDS (DIGI) — the Romanian business unit of Digi Communications N.V. — it has introduced Romania’s first 5G commercial service in the busiest areas of Bucharest. The latest move is expected to deliver increased speed for mobile broadband to businesses and consumers.

Ericsson boasts a leading position in telecommunications innovation and has a strong commitment to R&D. The company has one of the industry’s comprehensive intellectual property portfolios, which includes more than 49,000 granted patents worldwide. It is the largest holder of standard essential patents for mobile communication.

Positive industry trends are likely to boost the Swedish telecom equipment vendor’s long-term growth and profitability. The company continues to focus on its core business of selling networking equipment with the expected ramp up of 5G networks. It is also working to make sure that Europe can reap the benefits from better network capacity and ultra-low latency.

Reportedly, Romania intends to start spectrum auction for additional spectrum required for 5G wireless networks in fourth-quarter 2019. Meanwhile, DIGI can offer initial 5G services through its available commercial spectrum within the 3.6–3.8 GHz band.

While this first phase of DIGI’s 5G rollout is a Non-standalone deployment, the operator and Ericsson plans to activate more 5G radios and base stations in Bucharest and the city of Cluj-Napoca in the coming days.

Built on DIGI’s 4G network, the improved mobile broadband capabilities allow customers to connect to both 4G and 5G concurrently. The operator is deploying Ericsson’s 3GPP standards-based 5G New Radio hardware and software. Customers can pre-order terminals compatible with 5G, VoLTE and VoWiFi technology.

Ericsson is focusing on 5G system development and has undertaken many notable endeavors to position itself for market leadership. The growth in 5G subscriptions is estimated to be the fastest in North America, with 63% of projected mobile subscriptions within the next five years, followed by North East Asia with 47% and Europe with 40%.

Further, Ericsson’s R&D investments over the past two years have secured a competitive and industry-leading offering. Artificial intelligence and automation remain key enablers for the company’s business development, creating customer and shareholder value. It continues to execute its key business strategies and is on track to achieve its 2020 financial targets.

Driven by diligent execution of operational plans alongside enhanced technology collaboration with leading communications service providers, shares of Ericsson have rallied 34.5% compared with the industry’s rise of 23.1% over the past two years.

Ericsson currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Ubiquiti Networks, Inc. UBNT, Harris Corp. HRS and Motorola Solutions, Inc. MSI. While Ubiquiti sports a Zacks Rank #1 (Strong Buy), Harris and Motorola carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ubiquiti has long-term earnings growth expectation of 19.8%.

Harris has long-term earnings growth expectation of 8%.

Motorola has long-term earnings growth expectation of 7.7%.

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