With AT&T set to spend up to $14 billion, the deal is the largest in the Swedish equipment manufacturers history.
What are AT&T and Ericsson doing?
The strategic agreement will see Ericsson support AT&T’s Open RAN ambitions in the US by deploying a range of its 5G open radio access network products and solutions.
AT&T’s Open RAN plan is for 70% of its wireless network traffic to flow across open-capable platforms by late 2026.
Ericsson will build a 5G network platform for AT&T, utilising cloud-native technologies built on O-RAN standardised interfaces. Over time, AT&T and Ericsson plan to transform this to a cloud-native open network.
AT&T wants fully integrated Open RAN sites operating in 2024, in co-ordination with Ericsson and Japanese IT equipment company Fujitsu.
“High-performance and differentiated networks will be the foundation for the next step in digitalisation,” said Börje Ekholm, President and CEO at Ericsson.
“I am excited about this future and happy to see our long-term customer, AT&T, choosing Ericsson for this strategic industry shift.”
Ericsson said the intelligent and programmable capabilities of the network will enable innovation such as rApps, automation and network APIs to be built and exposed.
The company believes the move to increasingly resilient, open, sustainable and intelligent networks will help create new monetisation opportunities and tap the potential that 5G promised.
“With open interfaces and open APIs, the industry will see new performance-based business models, creating new ways for operators to optimise and monetise the network," Ekholm continued.
"We are truly proud to be collaborating with AT&T in the industrialisation of Open RAN and help accelerate digital transformation in the US,”
What technology will be involved?
The strategic agreement centres on creating an open programmable network for AT&T, which will enable the operator to accelerate the commercial introduction of Open RAN equipment.
AT&T will be able to utilise purpose-built hardware and virtualised commercial off the shelf (COTS) hardware from multiple vendors as part of its new network.
AT&T said it expects that increased competition in the US RAN market will lead to more innovation and greater efficiencies.
New technology can offer lower network costs, improved operational efficiencies and greater sustainability, but to ensure the flexibility to implement this technology, AT&T said it had to commit to Open RAN.
“This move away from closed proprietary interfaces will enable rapid scaling and management of mixed supplier hardware at each cell site,” AT&T said in a statement.
It said deploying open hardware, migrating to cloud RAN, and introducing 3rd party radios would help it to achieve this flexibility.
Technology AT&T will secure from Ericsson includes Massive MIMO and remote radios, Ericsson RAN compute, cloud RAN solutions and Ericsson’s Intelligent Automation Platform.
Impact on Nokia
While Ericsson shares jumped 9% following the announcement of the partnership, its Finnish rival Nokia saw shares fall by 8%.
Sales to AT&T represent 5-8% of the revenue generated from Nokia’s Mobile Networks business unit this year to date.
As a result of the partnership Nokia said it expects revenue from AT&T in Mobile Networks to decrease over the next two to three years, delaying their timeline to achieve double digit operating margin by up to two years.
Nokia said it still expects its Mobile Networks business to remain profitable and said that AT&T remains a key partner to its Network Infrastructure and Cloud and Network Services businesses.
“Whilst the news from AT&T is disappointing, our Mobile Networks business has made significant progress in recent years, increasing our RAN market share and technology leadership. I firmly believe we have the right strategy to create value for our shareholders into the future with opportunities to gain share, diversify our business and improve our profitability,” said Pekka Lundmark, President and CEO of Nokia.
