LOS ANGELES – Nokia and Ericsson both had reasons to crow during the recent Mobile World Congress Americas event on the back of significant 5G contract wins with U.S. operators. And luckily they had some energy left to throw shade at each other.
Both vendors over the past week were part of 5G deployment deals announced by AT&T and scored recent wins with Verizon and Sprint. The vendors also signed deals with T-Mobile valued at $3.5 billion each.
Rick Corker, president and head of the North America region for Nokia, said that the deals showed confidence in the vendor from its U.S. customers. He added that the T-Mobile deal in particular was a “mega-deal” and a “big one for us.”
“We are happy with the situation in the U.S. and North America in general,” Corker said. “We have a good 4G footprint that gives us an advantage in the market today.”
That sentiment might have been an understatement. Reports in July indicated that the vendor was losing market share in the U.S. Those reports noted that rival Ericsson was taking some share away from Nokia with Verizon.
Nokia CEO Rajeev Suri said at that time that those reports were “incorrect,” although he did admit that the vendor had lost contracts in a “small number” of Verizon markets. “That is true, and it is unfortunate,” Suri said of the losses. “Verizon is a longstanding customer, and we deeply value our relationship with them.”
While “happy” with its market share in North America, Nokia rival Ericsson touted progress. During a separate interview at the show, Thomas Noren, vice president and head of 5G commercialization at Ericsson, said the vendor was indeed gaining market share. His comments echoed those of Ericsson executives from earlier this year.
“We are seeing good progress in North America and really in the U.S.,” Noren said.
In terms of 5G deployments in North America, Noren did express some trepidation as to the initial pricing models being introduced for 5G services. Verizon is the first out of the gate announcing that unlimited access to its 5G fixed wireless service will cost $50 per month for current Verizon Wireless customers and $70 per month for all others.
“I sincerely hope they don’t price too low,” Noren said, adding that it’s always easier to lower pricing down the road compared with raising prices.
One thing both vendors have seemingly agreed on is that they are not averse to outside funding to help with 5G development. Despite the large financial numbers attached to the latest contracts, both Nokia and Ericsson continue to feel liquidity pressure.
Nokia’s latest quarter was underwhelming, while Ericsson has only just recently begun to keep its head above water following a painful reorganization.
Nokia last month scored a $583 million loan from the European Investment Bank to boost 5G technology research and development. The funding will focus on Europe as part of the European Commission’s Juncker Plan.
Tangentially, that cash infusion could also help the vendors pay for initial 5G deployments. Corker admitted that the initial deals were similar to past network generational upgrades where vendors are often on the hook to finance the actual deployments.
Ericsson gained access to around $290 million from the Juncker Plan in late May. Noren explained that Ericsson has a “very strong balance sheet” but had the opportunity to raise capital to help lower the vendor’s overall exposure to 5G development.
“We are very prudent with our balance sheet,” Noren said.
While both vendors have been successful in gaining 5G deals, their competitive nature thankfully remains intact.
Corker took a chance at the event to throw some shade at Ericsson’s recent push to increase its physical presence in North America. Ericsson last month announced plans to increase research and development spending, opening up a new software development center, hiring several hundred new workers, and producing 5G equipment stateside targeted at the North America region.
“We have a very strong focus on 5G in North America,” Corker said. “There are a lot of announcements out there about others investing more in R&D in North America to support their local customers. We’ve been doing that for a long time. In fact we invested $16 billion in a little company called Alcatel-Lucent to make sure we had a strong presence in North America.”
For its part, Noren said Ericsson’s plans remain on track, with the vendor likely to make a stronger push going into 2019.
The heated Nordic battle comes as South Korean rival Samsung continues to make its case in North America. Samsung was part of deals announced with three of the country’s largest wireless operators and has quickly gained a position as the third most important network equipment vendor.
A recent Dell’Oro Group report found that Samsung’s revenue share in North American increased three-fold between 2017 and the first half of 2018.
Corker said he was not surprised to see operators “considering a third vendor in their plans. “That’s pretty normal.”
Samsung’s push has been helped by recent regulatory decisions that have prevented U.S. operators from striking equipment deals with aggressive Chinese vendors Huawei and ZTE. Corker admitted as much, noting that “the number of companies that can operate is somewhat limited” and that Huawei and ZTE basically “can’t operate.”