Ericsson’s lands largest contract ever with $8.3bn 5G deal with Verizon

In Ericsson’s Q2 earnings call today, the Swedish vendor revealed it has struck an enormous $8.3 billion deal with Verizon, the largest in Ericsson’s history.

 

The five-year deal has a broad scope, which includes Ericsson’s latest 5G RAN technology, covering C-band, low-band, and mmWave deployments. With these technologies, Verizon hopes to expand and improve its 5G Ultra Wideband coverage.

 

“This is a significant strategic partnership for both companies and what we’re most excited about is bringing the benefits of 5G to US consumers, enterprises, and the public sector,” said Niklas Heuveldop, President and Head of Ericsson North America. “We’re looking forward to working with Verizon to leverage solutions like Cloud RAN and our Street Macro, adding depth and versatility to 5G network rollouts across the US.”

 

Ericsson will not be alone in supporting Verizon’s 5G ambitions. Back in 2020, in something of a surprise move, Verizon awarded a $6.6 billion contract to South Korea’s Samsung, overlooking the favourite to win the contract, Finland’s Nokia. 

 

Since April, Verizon has noted that both Ericsson and Samsung have been installing C-band equipment within its network to help expand 5G Ultra Wideband services. To date, these services have been primarily facilitated by mmWave spectrum in a limited number of urban areas, but now Verizon will seek to use Ericsson kit to make broader use of the C-band spectrum it bought at auction earlier this year for $52.9 billion.

 

According to Ericsson, the technology will support both standalone and non-standalone 5G.

 

For the vendor, the deal will be a huge cause for celebration for obvious reasons, but especially because at a time when the future of their business operations in China are looking uncertain due to Sweden’s decision to ban Chinese vendors from their 5G networks. In the earnings call, Ericsson revealed that it Q2 has seen its Chinese revenue drop 60% year-on-year, causing its overall group sales to shrink for the first time in three years.

 

“Where we are now is actually a state of uncertainty,” said Ericsson’s CFO Carl Mellander told MarketWatch, noting that more Chinese 5G contracts would be announced shortly. “There is a risk here that we will see an ongoing lower volume in China. Our job then is to compensate with other geographies.”