Samsung inked a $6.64 billion deal with Verizon to supply 5G radio access network (RAN) equipment to the operator through 2025. The agreement effectively marks the end of Nokia’s long established RAN contract with Verizon in a shakeup that could be one of the most significant vendor losses in a decade, according to Ryan Koontz, analyst at Rosenblatt Securities.

The framework of the contract, which Samsung disclosed in a regulatory filing, closely mirrors a prediction Koontz made earlier this summer. The finalized deal, which retroactively began at the end of June, could be the largest RAN contract to date for Samsung. 

The vendor said it represents 3.43% of sales in its latest fiscal year, but the expansive deal with Verizon on an annualized basis represents approximately 40% of its RAN sales last year. 

Samsung and Ericsson will split the majority of Verizon’s 5G RAN contract going forward, and the scale of the deal indicates that Verizon plans to fully rip out and replace Nokia’s equipment, according to Koontz. The annualized value of Samsung’s contract with Verizon represents almost 50% of Verizon’s 5G RAN share, he added. 

“Samsung is on pace to expand 5G’s global reach to deliver the massive connectivity, vast capacity, and blazing speeds critical for digital transformation, especially in today’s environment,” a Samsung spokesperson wrote in response to questions. 

“We are pleased to expand our long-standing partnership with Verizon to advance their next-generation network evolution. 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,” Alok Shah, VP of networks strategy and marketing at Samsung Electronics America, said in a statement.

Samsung is a “pioneer” in millimeter-wave, sub-6 GHz, and virtualized RAN, and is “the only company delivering a truly end-to-end 5G solution — from chips to networks to devices, and now services,” he added.

Verizon did not respond to a request for comment, and Nokia issued a statement that does not address questions about its long-term outlook with Verizon beyond the scope of its previous work with the operator.

“Nokia’s relationship with Verizon remains strong and strategic,” a spokesperson said in a statement. “We play a critical role in enabling Verizon’s 3G and 4G networks, and continue to work with them to accelerate innovation in 5G. They remain a top three global customer and our strategic partnership includes a wide range of areas such as radio access, IP routing, software, fixed networks, services, and more.”

Multiple developments lend credence to Koontz’ prediction that Samsung will displace Nokia for 5G RAN in all regions previously anchored by the Finnish vendor’s equipment during a multi-year period. 

RAN contracts are typically awarded on a 10-year cycle, and Nokia’s most recent loan for equipment and services to be delivered to Verizon was cut from $1.5 billion in 2017 to $500 million last month. That could be a bridge for the gear Nokia would need to provide to Verizon as it transitions to Samsung equipment, Koontz said. 

Moreover, Nokia has encountered struggles in 5G, prompting a complete overhaul of its semiconductor strategy precipitated by the abandonment of Intel chips in favor of a new system-on-a-chip (SoC) that won’t reach all of its 5G product until the end of 2022.

The shakeup also compounds the challenges confronting Nokia’s new CEO Pekka Lundmark who joined the company last month. 

Samsung’s determination to become a stronger RAN vendor on a global basis, bolstered by advancements in 5G and a potential willingness to negotiate major contracts at more competitive prices, also likely played into Verizon’s decision. The win at Verizon is expected to “provide a very strong halo effect on Samsung in other carriers,” Koontz wrote in a research note. 

“We believe AT&T and T-Mobile US are continuing to review their 5G strategy and either carrier could carve out share for Samsung in coming months,” he added. 

Samsung’s 5G equipment provisions to Verizon will also increase through the duration of the contract and shift from long-range to short-range equipment as 5G deployments progress, Koontz said. He expects the vendor to ship about 35,000 base stations and 70,000 small cells to Verizon during the next three years. Following that, Samsung will ship about 10,000 base stations and 150,000 small cells to Verizon through the remaining two years of the contract, he said.