STOCKHOLM/HELSINKI - In a significant shift in the telecom industry, AT&T (NYSE:T) has chosen Ericsson (BS:ERICAs) over Nokia (HE:NOKIA) for its open radio access network (RAN) technology needs, signing a $14 billion contract over five years. This move is part of AT&T's strategy to enhance its network infrastructure.
Following the announcement, Nokia's stock experienced a sharp 6.5% decline to EUR 2.8 today, reflecting investor concerns over the Finnish company's future revenue streams and the impact of losing a key client like AT&T. The loss is expected to delay Nokia's profit margin targets by two years.
Despite the setback, Nokia's CEO Pekka Lundmark remains committed to innovation in the Open RAN space. He pointed out that NTT Docomo (OTC:DCMYY) has selected Nokia's O-RAN system for their deployment, signaling confidence in their technology despite the recent contract loss.
On the other side of the coin, Ericsson's shares saw a positive impact from the news, rising by 5.3%. This uptick indicates market optimism around Ericsson's strengthened position in providing next-generation network technology to one of the world's largest telecom operators.
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