Samsung Electronics has said it had won a $6.64 billion order to offer wireless communication solutions to Verizon from the US, a major win for the South Korean company in the next-generation 5G network marketplace.
Samsung’s global prospects for its network business have improved following US sanctions on its larger rival Huawei Technologies, analysts said.
Verizon’s Chief Executive Officer Hans Vestberg told CNBC in July of last year that Verizon does not use any equipment from Huawei Technologies. Verizon had already been a Samsung customer before the order.
Verizon is thought to be Nokia’s biggest customer, JP Morgan research said in a July note.
“Samsung winning the order from Verizon would help the company expand its telecom equipment business abroad, potentially giving leverage to negotiate with other countries,” stated Park Sung-soon, an analyst in Cape Investment and Securities.
The arrangement is for network equipment, a Samsung spokesman said. The company declined to comment on detailed terms the contract like the part of 5G-capable gear included.
“With this latest long-term strategic contract, we will continue to push the boundaries of 5G innovation to enhance mobile experiences for Verizon’s customers,” Samsung said in a statement.
Samsung Electronics said in a regulatory filing the period of the contract, which Samsung’s US unit signed with Verizon Sourcing LLC, is from June 30, 2020 to Dec. 31, 2025.
Samsung had a 3% market share of the global total telecom equipment market in 2019, behind No. 1 Huawei with 28%, Nokia’s 16%, Ericsson’s 14%, ZTE’s 10 percent and Cisco’s 7 percent, according to market research vendor Dell’Oro Group.
The Trump administration last month unveiled plans to auction off spectrum formerly dedicated to military purposes for commercial usage starting in mid-2022, to ramp up fifth-generation network coverage in the US.
The next-generation 5G wireless network is expected eventually to join and empower high-speed video transmissions and self-driving cars, among other applications.
The United Kingdom government in July ordered China-based Huawei Technologies gear to be purged completely from its 5G network by the end of 2027, adding it needs to bring in fresh suppliers like Samsung Electronics and Japan’s NEC.
Samsung Electronics shares rose 2% compared to the wider KOSPI’s 0.5% rise.
The team at Platform Executive hope you have enjoyed the ‘Samsung wins $6.6 billion Verizon order for network equipment‘ article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Joyce Lee and Heekyong Yang. Additional reporting by Hyunjoo Jin. Editing by Muralikumar Anantharaman and Stephen Coates.
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