AT&T’s $14B open-RAN commitment with Ericsson snubs Nokia

AT&T said it plans to shift up to 70% of its wireless traffic to an open RAN network architecture by 2026 through a new agreement with vendor Ericsson. AT&T said the value of that new agreement could reach up to $14 billion over five years.

The move represents a shift away from Nokia and positions Ericsson as AT&T’s primary 5G equipment supplier. Ericsson’s shares rose slightly on the news Monday afternoon, while Nokia’s fell.

AT&T’s shift from Nokia to Ericsson isn’t a complete surprise. Analyst Earl Lum, of EJL Wireless Research, suggested last week that AT&T was considering removing Nokia from its list of 5G equipment suppliers.

“It’s still going to be interesting to see how they pull it all together,” Lum said of AT&T’s new open RAN effort with Ericsson.

The Nokia angle

Nokia’s loss of AT&T’s business represents another major blow to the company.

Verizon replaced Nokia with Samsung as one of its primary 5G equipment vendors in 2020. Ericsson is Verizon’s other primary supplier. Nokia officials didn’t immediately offer a comment on AT&T’s new deal with Ericsson.

Lum, the analyst who first hinted at AT&T’s plans, explained that part of the reason Verizon dumped Nokia was because of Nokia’s use of Intel chips in its products. In response, Nokia has inked new deals with Broadcom and Marvell, and refreshed its product portfolio. However, he said Nokia has been slow to replace its Intel-based products with those sporting chips from other vendors.

But a main reason driving AT&T’s shift away from Nokia could be Nokia’s use of fans in its radios. Lum said those fans – needed to keep the radios cool – struggled to survive in some of AT&T’s hotter markets.

“Given the joint nature of the press release I think Ericsson must have offered AT&T a really nice price for this deal. Perhaps Nokia was not prepared to go so low,” James Crawshaw, a principal analyst with Omdia (a Light Reading sister company), suggested in a LinkedIn post.

AT&T’s deal with Ericsson also comes amid a broad slowdown in spending among US network operators. According to recent reports from vendors like Nokia, Ericsson and Crown Castle, that slowdown was far bigger than expected.

The financial analysts with KeyBanc Capital Markets wrote that AT&T’s new deal with Ericsson could be a sign that operator spending is starting to stabilize.

Analyst Roger Entner, with Recon Analytics, noted that AT&T’s $14 billion contract with Ericsson will not cover its total radio needs over the course of five years. Meaning, AT&T will likely need to purchase radios from another vendor in order to meet its full radio needs.

‘Transformational,’ but light on details

During a call with media on Monday, AT&T’s Igal Elbaz called the operator’s deal with Ericsson “transformational,” noting that Ericsson will supply “the foundation” of AT&T’s open RAN platform. He said Ericsson would provide “many” of the parts of the effort, including hardware, cloud software and a management layer.

He said Ericsson will also provide dual-mode 5G radios that support AT&T’s C-band and 3.45GHz spectrum holdings.

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