Why Ericsson Signed a Multiyear 5G Contract with Rogers


Nov. 5 2019, Updated 2:26 p.m. ET

Ericsson and Rogers

Ericsson (ERIC) recently landed a multiyear contract with Canada’s mobile operator Rogers Communications (RCI) for work related to 5G (fifth-generation). Rogers will work with Ericsson to carry out 5G trials as it looks to have a 5G-ready network in place by 2020. T-Mobile (TMUS) has a similar 5G deployment timeline. Verizon (VZ) and AT&T (T) are also underway with 5G tests. They’re looking to launch 5G services in select markets before the end of the year.

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5G could enable $619 billion in revenue for operators in industry digitalization

Mobile operators are banking on 5G technology to enable them to support ultrafast connections for their subscribers. They want to open new revenue streams by being able to extend wireless connectivity to industrial machines as part of the Internet of Things (or IoT).

According to Ericsson, industry digitalization will create a $619 billion revenue opportunity for telecom (telecommunications) operators by 2026.

At Rogers, revenue increased 3% to $14.1 billion Canadian ($11.2 billion) in 2017.

Looking to 5G for demand for telecom systems

Canadian rivals Telus (TU) and BCE (BCE) are partnering with China’s Huawei for their 5G programs. BCE, whose businesses include Bell Wireless, initially partnered with Nokia (NOK) on 5G trials.

Ericsson is partnering with about 40 major mobile operators, including Verizon, on 5G programs. Ericsson, Nokia, and Huawei are expecting 5G deployment to drive demand for their telecom equipment. Ericsson and Nokia have seen their revenues decline recently amid a soft demand for their telecom systems since 4G (fourth-generation) deployment has peaked in key markets.


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