A changing of the guard? Samsung scores big with $6.6bn Verizon deal

At the start of 2020, when the US administration was beginning to really apply pressure to operators around the world to part ways with Huawei for their network equipment, an all too common response to such pressure was “well, who are the alternatives?’ 

 

Naturally, Ericsson and Nokia, giant vendors that they are, were the obvious choices for many operators, and both companies have indeed picked up a number of significant contracts as US political pressure and economic sanctions have begun to make working with Huawei less feasible.

 

But there are other contenders too, big and small, many of whom are betting big on new tech strategies like Open RAN. 

 

Perhaps the largest of these contenders is Samsung, who, despite being a major player in the network equipment sphere, has struggled to break into the upper echelon or RAN providers. But this could all be about to change, with it today becoming apparent that Samsung has won a roughly $6.6 billion dollar contract to supply equipment to Verizon.

 

While details about the deal remain limited, what is clear is that the deal, running until the end of 2025, represents a huge milestone for the South Korean company. This deal alone equates to almost 5% of their 2019 revenue and is seemingly the largest network deal ever for the company.

 

But, scale of the deal aside, it is also symbolic of the shifting vendor ecosystem. With Huawei increasingly ousted, there is certainly space for companies like Samsung to gain ground, but they will still have to compete with dominating presence of Nokia and Ericsson. However, this deal may give some indication that such competition is not so unthinkable after all.

 

Currently, Verizon works with Ericsson, Nokia, and Samsung to provide its RAN equipment. But the size of this new Samsung deal is so large that it would appear to suggest that the South Korean company is muscling in on someone else’s market share. In this case, the unlucky vendor seems likely to be Nokia – on top of their wobbly financial performance since the start of the year, rumours were circulating earlier in the year that Verizon was considering cutting out the Finnish giant.

 

If this is indeed the case, then it is a clear sign that the vendor space is changing rapidly, leaving open the possibility of a changing of the guard at the top of the hierarchy. A myriad of factors, including the pandemic, the clash between the US and China, and the rise of OpenRAN, are combining to make the vendor space a very dynamic environment right now, giving Samsung a major opportunity to take a substantial share of the global RAN market.