Ericsson (NASDAQ:ERIC) stock is trending upward today. Shares of the Sweden-based company, which makes equipment for telecom companies, are climbing after Ericsson announced that AT&T (NYSE:T) hired the company to help it launch a new 5G network in the United States. The deal will be worth about $14 billion.
Under the terms of the five-year deal, Ericsson will help “modernize” AT&T’s wireless network, primarily by preparing the company’s equipment to handle 5G technology, per Bloomberg.
ERIC Stock and the AT&T Deal
According to CNBC, Ericsson’s experience with open radio access network (Open RAN) technology helped the company win the deal with AT&T.
AT&T believes that increasing its use of Open RAN will diversify its supplier base while allowing it to grow more quickly. Additionally, utilizing the technology to a greater extent will enable more localized management of its hardware.
The telecom giant anticipates 70% of its wireless network traffic “to flow across open-capable platforms by late 2026.”
A Tough Blow for Nokia and NOK Stock
Because of Ericsson’s new deal with AT&T — which is bolstering ERIC stock today — Finland-based Nokia (NYSE:NOK) will not be able to sell as much equipment to AT&T in the coming years. NOK stock is sinking 4% as of this writing as a result.
Reacting to the news, Nokia CEO Pekka Lundmark said that AT&T’s decision was “disappointing.” However, Lundmark added that Nokia is ‘“fully committed’ to Open RAN and plans to “diversify its business and improve profitability,” per CNBC.
As of this writing, ERIC stock is up 9% for the past five days and more than 19% for the past month. However, shares are still down by more than 6% year-to-date (YTD).
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
