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What’s Ericsson Getting in the Kathrein Deal?

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Mar. 12 2019, Published 8:15 a.m. ET

Ericsson moves to broaden portfolio

Ericsson (ERIC) is buying Kathrein’s antenna and filters business. Kathrein is a German company that has been around since 1919. It is the world’s largest maker of antenna systems.

Ericsson is acquiring the business to broaden its existing portfolio of antenna products. Demand for advanced antenna technologies is expected to increase with the transition to 5G connectivity. Therefore, with this acquisition, Ericsson is looking to position itself to capture a larger share of 5G expenditure by having a wider selection of products and technologies that operators may want for their 5G networks.

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A professional team and a money-minting business

Ericsson didn’t reveal the financial details of its deal with Kathrein. But this is a transaction that is expected to give Ericsson a large team of top-notch professionals in product development and sales to complement the efforts of its existing teams. Also, Ericsson is poised to get a business that is already making money. According to Ericsson, the operations it is buying from Kathrein generated about $305 million in revenue in 2018.

Ericsson’s revenue jumped 10%

Ericsson generated around $7.0 billion in revenue in the fourth quarter, which ended in December 2018, an increase of 10% YoY. Revenue rose 3.2% YoY at Nokia (NOK) in that quarter. Ericsson is battling it out with Nokia and Samsung (SSNLF) for 5G dollars. All these companies have won 5G contracts from America’s top operators. AT&T (T), for instance, is procuring 5G equipment from all the three vendors. Verizon (VZ) launched its first 5G network in pockets of the United States using equipment procured from Samsung. Verizon also counts Ericsson and Nokia among its equipment suppliers.

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