How Will Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) Help NTT DOCOMO?

Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) recently reported that it has been chosen by NTT DOCOMO, INC., to offer its Unified Delivery Network solution. The UDN, which is making its first foray into Japan, will help DOCOMO customers to access a broad range of high-quality content. G-CDN, the Ericsson’s UDN has been used by many content providers around the world. It enhances network features in the public domain, permitting services to be monetized and optimized in new ways. Moreover, it permits service providers to advance the delivery of services, enhancing customer satisfaction.

The details

Ericsson considers that its UDN network will assist DOCOMO look out for new revenue streams around next-gen media and digital services. DOCOMO intends to launch content distribution services initially, followed by value-added capabilities such as toll-free data. It considers growing demand for 4K video, augmented reality and virtual reality content will have a positive impact on the need for UDN.

With the advent of the smartphone market and following usage of mobile broadband in contemporary times, customer demand for coverage quality and speed has increased. Moreover, to maintain best performance as traffic surges, there is also a constant demand for network tuning and optimization.

Telefonaktiebolaget, being one of the leading telecom services providers, is in demand among telecom operators to upgrade networks and expand network coverage for higher capacity and speed. Over the preceding six months, Ericsson’s shares have surged over 10%, ahead of the Zacks anticipated average gain of 2.6% for Wireless Equipment industry.

Despite a notable gain, Telefonaktiebolaget has been facing lot many problems in the previous few quarters. Most of the firm’s issues are related to drying-up investments from key telecom equipment makers around the globe. These firms continue to lower investments in 3G and 4G services while waiting for the launch of 5G networks. Even wireless carriers have reduced spending, which is eventually making matters worse for the company.

Considering the current market scenario, the Zacks Consensus Estimate for FY2017 earnings has been lowered to 27 cents from 29 cents. This came on the back of two downward projection revisions compared to zero positive revision.

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