Ericsson, LMT Partner for Cloud-Native Core Network Transformation

Ericsson ERIC was selected by Latvia’s largest communication service provider, Latvijas Mobilais Telefons (“LMT”), to modernize its core network infrastructure and build the foundation for the nationwide deployment of 5G Standalone (5G SA) services. By upgrading to Ericsson’s cloud-native solutions, LMT is embracing a future-ready architecture that will allow greater agility, scalability and innovation in delivering advanced digital services.

The two companies share a longstanding partnership, working together on several innovative initiatives, including mission-critical communications and network development projects. It marks the initial deployment of Ericsson’s Unified Data Management (“UDM”) solution within the broader Telia Group, of which LMT is part, highlighting ERIC’s growing role as a core network modernization leader in Northern Europe.

How Does This Deal Matter?

For telecom providers like LMT, upgrading backend systems to support 5G SA capabilities is essential to ensure a seamless rollout and integration of next-generation services. ERIC’s latest deal with LMT focuses on a comprehensive overhaul of LMT’s subscriber domain infrastructure. This includes transitioning to a cloud-based, service-oriented architecture, which is more agile and future-proof than legacy systems. Over the next year, Ericsson will upgrade LMT’s core network to ensure it can support cloud-native and virtualized network functions.

A key aspect of this transformation is the deployment of Ericsson’s Network Functions Virtualization Infrastructure. This solution enables LMT to run both virtualized and cloud-native network functions, giving the operator the flexibility to scale operations and integrate services with greater speed and efficiency. LMT will also migrate its Physical Network Function IP Multimedia Subsystem (IMS) to ERIC’s Cloud IMS platform. This move enables LMT to offer advanced IP-based voice and multimedia services with improved flexibility and reduced operational complexity.

The agreement includes the replacement of LMT’s legacy Home Location Register (HLR) and Home Subscriber Server (HSS) with Ericsson’s UDM platform.

As Latvia’s digital economy expands, the modernization of LMT’s core network with Ericsson’s cloud-native solutions is pivotal. LMT’s move to a cloud-native core with Ericsson puts it ahead in digital growth. This upgrade means future networks will be faster, smarter and better suited to people’s changing needs.

ERIC Set to Grow With 5G Strength Despite Geopolitical Risks

Ericsson is positioned to grow by capitalizing on strong 5G demand with its competitive products. It aims to lead in mobile networks and develop a robust enterprise business. Acquiring Vonage, Cradlepoint and Ericom helps expand into wireless, 5G and security. Heavy R&D investment keeps the company ahead in 5G, while its patents generate steady income. By focusing on innovation, automation and smart deals, it is driving growth and securing its place in the wireless market.

Recently, ERIC unveiled Ericsson On-Demand, an innovative solution that provides 5G core network services through a true SaaS model. Developed in collaboration with Google Cloud, this platform leverages Google Kubernetes Engine and Google’s AI infrastructure to give communications service providers (CSPs) a fully managed, cloud-native solution. Ericsson On-Demand allows CSPs to quickly deploy and scale their core networks, cut operational costs, and gain the agility needed in today’s fast-changing telecom environment.

However, Ericsson’s business is under pressure from various geopolitical and economic challenges. Its small market share has led to falling revenues in China, partly due to Sweden’s ban on Chinese 5G vendors, which could hurt ties in the region. Supply-chain issues are adding to the woes. The company faces tough competition from Huawei and Nokia, along with lower spending by telecom operators in the Middle East, Africa and India, resulting in further revenue declines.

ERIC’s Zacks Rank & Stock Price Performance

Ericsson, carrying a Zacks Rank #2 (Buy) at present, has gained 37.3% over the past year compared with the Zacks Wireless Equipment industry’s growth of 33.3%.

Stocks to Consider From the Computer & Technology Space

Some other top-ranked stocks from the broader technology space are NETGEAR, Inc. NTGR, TaskUs, Inc. TASK and Cognizant Technology Solutions Corporation CTSH. NTGR currently sports a Zacks Rank #1 (Strong Buy), and TASK and CTSH carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

NETGEAR’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 179.12%. In the last reported quarter, NTGR delivered an earnings surprise of 105.71%. Its shares have gained 101.7% in the past year.

TaskUs’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, matched in one and missed in the other, the average surprise being 6.39%. In the last reported quarter, TASK delivered an earnings surprise of 18.75%. Its shares have risen 21.6% in the past year.

Cognizant’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 6.38%. In the last reported quarter, CTSH delivered an earnings surprise of 3.36%. Its shares have grown 19.1% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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