Ericsson has clinched a monumental $14 billion contract to modernize AT&T Inc.’s wireless network, according to a recent Bloomberg report. This deal, focusing on the development of an open network, marks a pivotal shift in the industry and a notable win over Ericsson’s long-standing rival, Nokia.
Ericsson’s agreement with AT&T introduces a new era of network flexibility, allowing the U.S. carrier to diversify its vendor relationships rather than being tied to a single supplier. This strategic shift, hailed by the Stockholm-based Ericsson, is set to unfold over five years, primarily upgrading AT&T’s infrastructure to advanced 5G technology.
The announcement dealt a significant blow to Nokia, with its shares plummeting by 5.9% in Helsinki. The Finnish company acknowledged that this development could delay its financial targets by up to two years. Currently, Ericsson supplies two-thirds of AT&T’s network, with Nokia covering the remaining third. In contrast, Ericsson’s shares experienced a 6.1% surge in Stockholm following the news.
The contract underscores the industry’s move toward open radio access network (OpenRAN) technology, which is more adaptable and cloud-friendly compared to traditional integrated solutions. This approach allows a broader range of vendors to contribute, aligning with AT&T’s vision for a more flexible and innovative network infrastructure.
AT&T’s decision to invest in OpenRAN technology comes at a time when the global 5G spending is experiencing a downturn. AT&T CEO John Stankey noted that the market slowdown provided an opportunity to push vendors toward more progressive open network solutions.
Despite Ericsson’s win, AT&T’s CEO emphasized that Nokia might still play a role in the new network as one of the potential suppliers. Nokia’s CEO Pekka Lundmark expressed disappointment over AT&T’s decision, noting the significant impact on the company’s sales.
Western shift to OpenRAN post-Huawei ban
The move toward OpenRAN gained momentum in the West following the ban on China-based Huawei Technologies Co. infrastructure. Governments are increasingly advocating for a more competitive mobile technology ecosystem, extending beyond the traditional dominance of Scandinavian firms.
AT&T envisions the new network to rapidly leverage next-generation wireless technology. The company anticipates benefits such as sustainable, lower-power networks with enhanced performance. Chris Sambar, AT&T Network’s executive vice president, highlighted the creative potential and flexibility offered by having multiple suppliers.