Market News

Ericsson & BT Enter Another 5G Deal

Story Highlights

The latest 5G deal shows BT is happy working with Ericsson, and that could lead to more business for Ericsson from the operator in the future. The Huawei ban also presents a great opportunity.

Ericsson (ERIC) and BT Group (BT) have struck a new partnership focused on private 5G networks. Headquartered in Sweden, Ericsson provides telecom equipment and related services. Its main competitors are Finland’s Nokia (NOK) and China’s Huawei. Meanwhile, BT is a multinational telecom provider headquartered in Britain.

According to a Reuters report, Ericsson and BT have decided to come together to build private 5G networks for businesses across Britain. A private 5G network can be deployed on a campus, factory, or port to offer a dedicated high-speed wireless connection to the facility. They have already built a private 5G network for the Belfast Harbour in Northern Ireland.

The partners are targeting customers in sectors such as manufacturing, healthcare, transport and logistics, and shopping centers with their private 5G service offering. Ericsson and BT see trends such as the rise of remote maintenance and the use of drones in inspection work driving demand for private 5G services.

Wall Street’s Take

The Street is cautiously optimistic about Ericsson stock with a Moderate Buy consensus rating. That’s based on one Buy versus two Holds. The average Ericsson price forecast of $15 implies 82% upside potential to current levels. Shares have declined 24% year-to-date.

Hedge Funds

The TipRanks Hedge Fund Trading Activity tool shows that confidence in ERIC is currently Very Positive, as five hedge funds increased their cumulative holdings of the stock by 10.4 million shares in the last quarter.

Key Takeaway for Investors

BT is one of Ericsson’s major telecom equipment customers. The latest partnership is a sign that the companies are happy with their relationship, and it could lead to even more business for Ericsson in the future. BT was previously served by Huawei. However, the Chinese vendor has been banned from many Western 5G markets. Building strong ties with customers like BT could help Ericsson increase its share of the telecom equipment market as it takes over Huawei customers.

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