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How Ericsson Plans to Leverage TV and Media Industry Growth

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Apr. 5 2016, Updated 12:04 a.m. ET

OSS and BSS

Ericsson (ERIC) is one of the market leaders in operations support systems (or OSS) and business support systems (or BSS). The company aims to become the preferred ICT transformation partner in OSS and BSS. According to Ericsson, the fragmented OSS and BSS market will grow at a CAGR (compounded annual growth rate) of 5%–7%.

Operators will replace their legacy OSS and BSS systems in order to cater to rapidly diversifying devices, content, and applications. Ericsson has an end-to-end OSS and BSS offering that includes consulting, systems integration, and IT managed service capabilities. In 2015, Ericsson also acquired the Sunrise Technologies telecom business, a Chinese (FXI) provider of IT services in OSS and BSS.

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TV and media industry

In the TV and media industry, Ericsson wants to be the transformation partner of choice for content owners, broadcasters, and TV service providers. The firm is currently a market leader in IPTV (Internet protocol television) platforms, video compression, and cloud DVR. According to Ericsson, the fragmented TV market will grow at a CAGR of 10%–12% between 2014–2018.

Video traffic in mobile networks is projected to grow at 55% until 2021. Almost 70% of all mobile traffic is expected to be video by 2021. Ericsson has a portfolio spanning the TV value chain that is complemented by consulting, systems integration, and broadcast managed services.

Ericsson recently acquired Fabrix Systems, a provider of Cloud DVR and video storage and processing. In 2015, BBC signed a multiyear service contract with Ericsson for playout services. Ericsson also announced two important TV and media agreements with Telus and AT&T (T) in North America in the second half of 2015.

AT&T accounts for 11.2% of the iShares US Telecom ETF (IYZ). Other top holdings of this ETF include Verizon (VZ) with a 10.9% weight and T-Mobile (TMUS) with a 5.6% weight.

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