Ericsson Wins $14B AT&T Network Upgrade Deal in 2025, Nokia Shares Drop
In a groundbreaking $14 billion contract, AT&T partners with Ericsson to modernize its wireless network, pushing Open RAN technology forward and impacting Nokia's market position in 2025.
KEY POINTS
- Ericsson's stock surged while Nokia's declined after AT&T selected Ericsson for a $14 billion wireless network modernization project.
- AT&T, a leader in U.S. telecommunications infrastructure, describes this as a pivotal 'strategic industry shift.'
- The move significantly challenges Nokia's revenue and market share within the telecom sector.
On early trading Tuesday, American depositary receipts (ADRs) of Nokia (NOK) dropped by over 5%, whereas Ericsson (ERIC) shares rose by 1.6%, following AT&T's announcement of a $14 billion agreement with Ericsson to upgrade its wireless network. AT&T's own shares increased by 3%.
AT&T, one of the world’s top telecommunications companies and a major investor in U.S. wireless and broadband fiber infrastructure, termed the collaboration a 'strategic industry shift.' Throughout this five-year partnership, Ericsson will deploy an Open Radio Access Network (Open RAN) in the United States, expected to manage 70% of AT&T’s wireless network traffic by late 2026.
This decision represents a major transformation in AT&T's network infrastructure approach, transitioning from traditional proprietary RAN solutions to an open, flexible framework. Open RAN aims to reduce operational costs, diversify suppliers, and enhance network adaptability.
For Nokia, this is a significant setback, potentially affecting its revenue streams and market share, as AT&T contributed between 5% to 8% of Nokia’s mobile network sales in 2023.
Nokia has indicated that cost-cutting measures might mitigate some effects of AT&T’s decision but cautioned that achieving a double-digit operating margin in its mobile networks division could be delayed by up to two years.
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