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Samsung seals £5bn telecoms equipment deal with Verizon

Samsung has announced that its US unit has agreed a deal worth ₩7.9tn (South Korean Won; approximately £5bn) to provide network equipment for Verizon, establishing itself as a serious competitor in the telecommunications equipment space.

Samsung confirmed that the order is for wireless network equipment, but did not reveal many additional details of the contract, such as the amount of 5G-compatible equipment involved.

“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.

The contract will last until the end of 2025 and is worth ₩7.9tn (£5bn); this is equivalent to almost 3.5 per cent of Samsung Electronics’ 2019 sales.

Last year, Verizon CEO Hans Vestberg told media that the company does not use any equipment from Huawei: one of a very small handful of major 5G equipment vendors. According to JP Morgan research, Verizon is Nokia’s biggest customer. It has already worked with Samsung before signing this contract.

While Samsung Network supplied 5G network equipment to South Korean operators during its 2019 rollout, the Verizon contract is likely to be its biggest contract to date and marks a leap into the highly competitive telecommunications equipment sector.

While the sector is currently dominated by Huawei (28 per cent), Nokia (16 per cent) and Ericsson (14 per cent), US President Donald Trump’s relentless attacks against Huawei and other Chinese technology companies such as ZTE is encouraging operators in countries allied to the US to consider working with alternative emerging competitors.

Speaking at a virtual product launch last month, Samsung UK and Ireland VP Conor Pierce said that Samsung would “welcome the opportunity” to assist with the UK’s 5G rollout.

However, Samsung VP Woojune Kim previously told British lawmakers that there are obstacles which prevent it from competing with other 5G vendors, e.g. the necessity for investment in legacy technology; extremely aggressive competition from Huawei, and the possible deterioration of user experience that may come from overlaying Samsung equipment atop other vendors’ 4G equipment.

Samsung is a founding member of the Open RAN Policy Coalition, an industry group which promotes the adoption of interoperable RAN solutions to encourage competition and innovation in the telecommunications equipment space. The group is considered an anti-Huawei coalition, with members including Cisco, Dell, Facebook, Fujitsu, Google, HP, IBM, Intel, Microsoft, Nokia, Oracle, Qualcomm, Reliance Jio, Verizon and Vodafone.

According to Reuters, shares in Samsung Electronics jumped as much as 3.06 per cent upon the announcement.

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