Recently, leading communications solutions provider Ericsson (ERIC) signed a managed services contract with MBNL for an undisclosed amount. MBNL includes EE (a merger of Orange and T-Mobile) and Three UK 4G LTE networks.
Although the financial details are yet to be disclosed, this 5-year contract will include the delivery of central operations and transmission, network performance and optimization, field services, and multi-vendor spare parts management services.
Earlier, the 3G networks of T-Mobile and Three UK entered into a merger agreement to form a 50:50 JV with more than 12,000 sites consolidated. The two carriers created a third-party organization, Mobile Broadband Network Ltd (:MBNL) in 2007 to run a joint network with Ericsson. Over the years, Ericsson has been awarded with multiple contracts from the company. The current 5-year contract is an extension of its managed services contract.
In 2008, Ericsson won a 4-year contract from MBNL to manage the integration of both the operators' 3G radio access networks (:RAN). Ericsson will now provide MBNL with a fully managed end-to-end operations service for its 2G and 3G networks.
Ericsson has been receiving a number of contracts from the major mobile operators globally, the most recent being a three-year contract inked with T-Mobile for application development and maintenance of the latter’s billing system.
Bharti Airtel had also selected Ericsson’s Intelligent Modernization Network Solution for its prepaid subscribers, banking on which the global telecommunication operator could offer flexible data plans to prepaid customers, thereby enhancing customer experience through flexible bundling and real-time control of chargeable services.
Ericsson had received another contract from India’s Reliance Communications worth $1 billion for managed services to operate and manage the wireline and wireless networks in the Northern and Western States of India. Apart from these, Ericsson was awarded a contract from Entel, a Chile-based telecom company, to provide 4G/LTE network to its operators.
With all these contracts on board, Ericsson is fully aligned to achieve its long-term objective of expanding its base and operations in the emerging markets. Given the favorable scenario, we expect Ericsson stock to experience a revision in the coming quarters.
Ericsson currently has a Zacks Rank #3 (Hold). Other players operating in the same industry such as Ubiquiti Networks Inc.(UBNT), ShoreTel Inc. (SHOR) carry a Zacks Rank #1 (Strong Buy), while Interdigital Inc. (IDCC) carries a Zacks Rank #2 (Buy).
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