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Nokia Corporation NOK recently revealed that it has been awarded a multi-year, multi-billion deal extension by Bharti Airtel (Airtel) to enhance and expand 4G and 5G network infrastructure across key regions of India, leveraging its advanced connectivity and technological solutions.

Digging Deep Into the NOK-Airtel Deal

As part of the agreement, Nokia will deploy equipment from its state-of-the-art industry-leading 5G AirScale portfolio, comprising baseband units and its latest generation of Massive Multiple-Input Multiple-Output (MIMO) radios. This portfolio integrates Nokia’s energy-efficient ReefShark System-on-Chip technology to deliver faster speeds, lower latency and greater capacity that will likely help Airtel meet growing demands, while the Massive MIMO radio supports the diverse deployment and operational needs of mobile network operators.

Additionally, Airtel will benefit from Nokia's MantaRay network management solution, renowned for its network optimization and automation capabilities. This solution features self-configuring modules that enhance network performance and efficiency, tailored to meet specific operational challenges and growing complexity. The AI-based automation will also facilitate better monitoring and management of the network with fewer people to ensure seamless equipment installation and superior performance.

Will This Deal Extension Drive NOK Shares?

With the emergence of the smartphone market and subsequent usage of mobile broadband, user demand for coverage speed and quality has recently increased. Further, to maintain superior performance as traffic increases, there is also a continuous need for network tuning and optimization. The company’s expertise in mission-critical networks is well-established, with deployments across more than 2,600 leading enterprise customers in the transportation, energy, manufacturing, webscale and public sector segments worldwide.

Nokia has been a key partner to Airtel for more than two decades, helping the company build its 2G, 3G, 4G, and now 5G networks. Their partnership has recently reached a new milestone with the launch of the Green 5G Initiative, aimed at enhancing energy efficiency and reducing carbon emissions in alignment with Airtel’s sustainability goals. This agreement further strengthens their long-standing collaboration, highlighting both companies' shared commitment to innovation and the sustainable growth of network infrastructure in India.

These advancements are likely to propel the stock with incremental revenue generation and inducement of similar deals from other carriers in the future. The deal is also expected to strengthen Nokia’s position as a leading telecommunications equipment provider in India.

NOK’s Stock Price Performance

Shares of Nokia have gained 20.4% over the past year compared with the industry’s growth of 43.5%.

NOK’s Zacks Rank and Key Picks

Nokia currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry have been discussed below.

Plexus Corp. PLXS sports a Zacks Rank of 1 (Strong Buy) at present. It is a leading provider of electronic contract manufacturing services to original equipment manufacturers (OEMs) in a wide range of industries, including Healthcare/Life Sciences, Industrial and Aerospace/Defense market sectors. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, PLXS delivered an earnings surprise of 20.92%.

Workday Inc. WDAY carries a Zacks Rank #2 (Buy) at present. In the last reported quarter, it delivered an earnings surprise of 7.36%.

WDAY is a top supplier of enterprise-level software solutions for human resources and finance management. The company's cloud-based platform makes it simpler for businesses to offer analytical insights and decision support by integrating finance and human resources into a single system.

InterDigital, Inc. IDCC sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%

IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.

Zacks Investment Research

Ericsson ERIC has surged 62% over the past year compared with the industry’s growth of 43.2%, outperforming peers like Nokia Inc. NOK and Motorola Solutions Inc. MSI.

Ericsson is well-positioned to capitalize on the market momentum with a competitive 5G product portfolio. With a holistic growth focus, the company strives to be the leading telecommunications infrastructure provider worldwide and establish a focused enterprise business.

One-Year Price Performance

ERIC Rides on Portfolio Strength

With the emergence of the smartphone market and subsequent usage of mobile broadband, user demand for coverage speed and quality has increased manifold. Further, there is a continuous need for network tuning and optimization to maintain superior performance as traffic increases. Ericsson is much in demand among operators to expand network coverage and upgrade networks for higher speed and capacity. It is reportedly the world’s largest supplier of LTE (Long-Term Evolution) technology with a significant market share and has established several LTE networks across the globe.

Ericsson is focusing on 5G system development and has undertaken many notable endeavors to position itself for market leadership on 5G. It currently has 170 live 5G networks across the globe, spanning 72 countries. The company believes that the standardization of 5G is the cornerstone for digitizing industries and broadband. The deployment of 5G networks is likely to boost the adoption of IoT (Internet of Things) devices, with technologies like network slicing gaining more prominence.

Ericsson continues to invest in the Enterprise business to make it a sizeable part of its business. The company has introduced on-demand network slicing capability in Android 14 devices. It empowers developers to enhance the flexibility of applications and allows service providers to better align network connectivity with user-specific requirements.

ERIC Bets Big on AT&T Contract

Ericsson has inked a five-year contract worth $14 billion with AT&T Inc. T to modernize the latter’s network infrastructure. AT&T intends to leverage Ericsson technology to deploy a commercial-scale open radio access network (Open RAN) across the country to help build a more robust ecosystem of network infrastructure providers and suppliers. For Ericsson, the deal marks a remarkable achievement in outdoing rivals by embracing Open RAN technology to help create an open, agile, programmable wireless network.

Ericsson has stepped up production in its 5G Smart factory in Lewisville, TX, to cater to the increased demand for 5G equipment with an additional $50 million investment, bringing it to the forefront of 5G innovation. With highly automated and efficient processes, the factory is fully powered by renewable electricity, producing next-generation 5G and Advanced Antenna System radios for Ericsson's U.S. customers.

Estimate Revision Trend of ERIC

Earnings estimates for ERIC for 2024 have moved up 7.3% to 44 over the past 60 days, while the same for 2025 has remained steady at 51 cents. The positive estimate revision depicts bullish sentiments for the stock.

ERIC Plagued by Margin Erosion

Ericsson operates in the highly competitive wireless equipment market. It has to cut its production costs and bring down its selling price to attract new customers in emerging markets while maintaining existing business relationships. The industry consolidation among customers and major rivals is posing a threat to Ericsson, intensifying price competition. Moreover, Ericsson operates in a dynamic market characterized by rapid technological changes, high product obsolescence and evolving standards, necessitating frequent product introductions and short product life cycles that substantially increase R&D costs and erode margins.

Soft China Markets Weigh on ERIC

Ericsson’s business is likely to be affected by geopolitical turmoil and economic uncertainties in its operating countries. With a substantially lower market share, the company is witnessing a revenue decline in China in the Networks and Digital Services segments. Ericsson had warned that Sweden’s decision to exclude China-based vendors from Swedish 5G networks might adversely impact its business in the East Asian country. Disturbances in the supply chain are likely to further hamper its sales. It is also witnessing a revenue decline in the Middle East, Africa and India owing to lower capex spend from operators.

End Note

By investing steadily in infrastructure for a leading 5G coverage, Ericsson is well-positioned to strengthen its leading market position. New 5G licensing agreements are driving growth in the Networks segment. Ericsson’s policy of strategic buyouts and continuous product innovation is accelerating commercial expansion with a holistic growth focus. The AT&T deal is further likely to drive organic growth. The uptrend in estimate revisions further portrays optimism about the stock’s growth potential.

However, price wars owing to competitive pressure have eroded its profitability. Soft China market conditions are weighing on profitability. With a Zacks Rank #3 (Hold), ERIC appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research