Nokia (NOK) finally enters Ericsson’s (ERIC) territory

Shares of Nokia (NOK) surged as high as 3.60% today when the company announced that it has secured a deal for 5G expansion in Sweden, Ericsson’s (ERIC) home territory.

Nokia secured a 5 year deal with Net4Mobility to deploy its commercial 5G network across key regions of Sweden. According to the terms of the deal, Net4Mobility will leverage communication equipment from Nokia’s AirScale portfolio. These include AirScale massive MIMO Adaptive Antenna solutions, radio access network (RAN) solutions and state-of-the-art AirScale Base Stations.

This collaboration is likely to not only boost the adoption of next-gen connectivity among end users but also strengthen its momentum with 5G wins across Scandinavia and the Baltic countries. Nokia will also provide adequate technical assistance for ensuring seamless operations and professional services like network optimization and integration.

Nokia’s AirScale is touted as the industry-first commercial end-to-end 5G solution that offers massive capacity scaling with ultra-low latency. The unique technology helps operators to curtail their future capital expenditures and maximize the value of both licensed and unlicensed spectrum while bridging the gap between IT and telco.

Apart from the ongoing deployment of 5G services, the Finnish equipment supplier will be responsible for enhancing the carrier’s legacy 4G network. The collaboration will also aid Net4Mobility to meet industry standards for security with Nokia’s advanced solutions. As part of the partnership, Net4Mobility will take advantage of the 3.5 GHz frequencies that it recently won during Sweden’s 5G auction. Notably, the spectrum band is considered ideal for dense urban coverage.

To sum it all up, the 5G services when combined with AirScale portfolio, will facilitate customers to make the most out of ultra-high-speed and low-latency connectivity. Nokia also expects to add new sites over the span of the contract and fast-track the deployment of this enhanced network to reach 99.99% of the Swedish population by year end 2023.

In addition, Nokia is on track to deliver on its three phased plan to achieve sustainable, profitable growth and technology leadership and is well positioned for the ongoing 5G tech cycle given.

What this means for Ericsson (ERIC) stock

As Nokia leads the 5G revolution you may begin to see investors in Ericsson sell out and buy into Nokia, according to Barron’s.

One thing to note is that Ericsson will pay a large $97M settlement to Nokia for damages caused which will affect Ericsson’s Q2 report. In addition, Ericsson’s China ambitions are in jeopardy following Sweden’s Huawei ban, this makes a great opportunity for Nokia.

China had earlier asked Sweden to “immediately correct the mistake” of banning Huawei and issued a veiled warning this month that it might take retaliatory action against Ericsson.

Nokia’s home country, Finland, has not banned Huawei outright, although its parliament has passed a law that allows it to ban equipment for national security reasons.

A Nokia spokesperson said the company has already completed the 5G tests in China.