Can Vodafone (VOD) Benefit From Open RAN Network Thrust?
Vodafone Group Plc VOD has reaffirmed its commitment toward Open Radio Access Network (RAN) technology by pledging to work in unison with Intel Corporation INTC for the development of purpose-built architecture for commercial deployment across the globe. At the same time, Vodafone is partnering with Nokia Corporation NOK and Orange SA ORAN for a pilot run in Italy and Romania, respectively. The trial is part of the network modernization initiative of Vodafone, as it aims to scale up operations to effectively handle exponential growth in data traffic.
The Open RAN network enables service providers to utilize non-proprietary subcomponents from a variety of vendors. It helps to increase vendor diversity and avoid lock-in by facilitating programmable, intelligent, disaggregated, virtualized and interoperable functions. The increasing propensity to shift from single-vendor solutions towards open, multi-vendor networks is mostly driven by service providers’ need for enhanced control, interoperability and flexibility.
Vodafone had earlier agreed to collaborate with Intel in 2022 to develop its own chip architecture. The two firms will now join forces to design chipsets at Vodafone’s campus in Malaga, Spain. The company aims to leverage Intel’s strength in silicon architecture with its networking expertise, rapid prototyping, verification and testing and eventual mass production of innovative chips. These chipsets will then be made available to smaller third-party vendors to test their own algorithms.
Partnering with Orange, Vodafone has successfully made 4G calls in a rural area near Bucharest, Romania, based on Open RAN technology. The companies are working together to select strategic vendors to roll out Open RAN technology for future mobile networks across Europe. This will offer Orange greater flexibility to add new radio sites or upgrade existing ones while keeping the cost and energy consumption low. This model will likely serve as a blueprint to extend 4G and 5G networks to rural communities across Europe.
The 5G transition is expected to be disruptive, creating new avenues for industries across the board. 5G is likely to augment the scalability, security and universal mobility of the telecommunications industry, which is expected to propel the wide proliferation of IoT. The telecom firms are facilitating their customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible automation.
Further, Vodafone has partnered with Nokia to run a commercial 5G Open RAN pilot study in Italy. This will likely offer a platform for more independent software providers, start-ups and local firms to collaborate for innovation. By unlocking network efficiencies with common operability, software delivery and increased hardware sharing, Nokia has reduced the total cost of ownership for mobile operators. The company is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio.
Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include a seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and the Internet of Things.
The concerted efforts are part of Vodafone’s strategy to widely deploy Open RAN across Europe, as it aims to deploy 2,500 Open RAN sites in the United Kingdom. These will likely lead to the wider adoption of disaggregated and automated solutions with the proliferation of Open RAN technology.
The stock has lost 15.2% over the past year against the industry’s growth of 4.5%.
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Vodafone presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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