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Ericsson, XL Axiata Ups 5G Cloud Core Solutions in Indonesia

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Zacks Equity Research
·4 min read
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Ericsson ERIC recently joined forces with an Indonesia-based telecommunications services provider — XL Axiata — to deploy its cutting-edge Cloud Packet Core and Network Functions Virtualization Infrastructure (NFVI) technologies in East Indonesia. The latest move will enable the Sweden-based equipment maker to capitalize on its wireless core services capabilities and promote the evolution of its 5G ecosystem to make it more prevalent across the globe. The partnership is expected to help Ericsson expand its geographical presence in the Asian markets. However, financial terms of the deal were not disclosed.

Headquartered at Jakarta, XL Axiata is believed to be the second largest telecommunications company in Indonesia. The company provides home broadband services with stable fiber optic Internet connectivity. It also provides business solutions and enables corporate customers to grow their businesses through various technological innovations. The company caters to customers based in Bali, Java and Lombok as well as cities in and around Sumatra. Notably, Ericsson will prepare XL Axiata for advanced 5G services, while addressing the accretive networking requirements of consumers and businesses based in Indonesia with utmost flexibility.

Furnished with next-gen applications, Ericsson’s Cloud Packet Core streamlines network capacity growth and supports customers to migrate from virtual Evolved Packet Core to dual mode core operations for seamless 5G connectivity. The innovative platform introduces network slices for massive IoT and reinforces critical enterprise deployments with utmost speed and automation. The Cloud Packet Core solution also optimizes workflows with leading cloud providers like Red Hat and VMware, Inc. VMW. This, in turn, has enabled the service providers to reduce operating costs by up to 65%. Markedly, Evolved Packet Gateway (EPG) is an integral application of this new-age platform. With a cost-efficient network design, the EPG strengthens cloud infrastructure deployments and provides network scalability with its 5G-ready complete gateway feature.

Meanwhile, the NFVI is a complete solution that enables operators to deploy virtual network functions (VNFs) in a short period of time and minimizes complexity during the NFV transformation. With automated orchestration and management, the NFVI dynamically allocates resources for VNFs with high availability, redundancy and high throughput with low latency. The technology encompasses industry-leading software and hardware products that support central and distributed cloud deployments across underlying virtual environments. With a low cost of ownership, the flexible solution will assist XL Axiata with built-in customizations, thereby delivering improved customer experience. The latest deployment is a win-win situation for both the companies as it will not only support the Indonesia-based company to tackle high traffic demands but also reinforce Ericsson’s 5G-related endeavors with lucrative revenue stream.

To date, Ericsson secured 99 commercial 5G agreements with unique communication service providers, of which 54 are live networks. The company is witnessing healthy momentum in its business, based on the strategy to increase investments for technology leadership, including 5G. It expects mainstream 4G offerings to give way to 5G technology in the near future. Ericsson is on track with its 2020 and 2022 financial targets while strengthening business in the long term. It has invested in R&D and supply-chain capacity to increase market share. The company continues to focus on a restructuring plan to cut costs and streamline operations as well as explore options for the media business.

Ericsson currently has a Zacks Rank #3 (Hold). It has a long-term earnings growth expectation of 26.3%. The stock has gained 39.7% compared with industry’s growth of 30.5% in the past three months.



Some other better-ranked stocks in the industry are Clearfield, Inc. CLFD and Nokia Corporation NOK. While Clearfield sports a Zacks Rank #1 (Strong Buy), Nokia carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield’s bottom line surpassed the Zacks Consensus Estimate twice in the last four quarters. The company has a trailing four-quarter earnings surprise of 45.6%, on average.

Nokia’s bottom line surpassed the Zacks Consensus Estimate twice in the last four quarters. The company has a trailing four-quarter earnings surprise of 37.5%, on average.

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