AT&T Inc. (NYSE:T) announced late Monday that it is partnering with Swedish rival Ericsson to deploy an open radio access network (Open RAN) in the US, which AT&T expects to use for 70% of its wireless network traffic by late 2026.
AT&T said it is set to spend close to $14 billion over the five-year contract.
The agreement will make Ericsson the largest supplier to AT&T, the company added.
The partnership represents a significant blow to Nokia, which saw its NYSE-listed shares fall more than 4% on Tuesday, as AT&T will replace existing Nokia equipment in several places.
Nokia noted that its revenue from AT&T, which accounted for 5% to 8% of its mobile networks unit, will decrease over the next two to three years.
ORAN, or open radio access network, is expected to result in significant cost savings for telecom operators as it uses cloud-based software and gear from many suppliers instead of relying on proprietary equipment supplied by companies such as Nokia, Ericsson and Huawei, which do not work with each other, Reuters reported.
AT&T said it expects fully integrated Open RAN sites operating in coordination with Ericsson and Fujitsu starting in 2024.
The company added that by 2025, its network will also have equipment from suppliers such as Corning (NYSE:GLW), Dell Technologies, and Intel.
Shares of AT&T rose nearly 4% to $17.26 in midday trading on Tuesday, while Ericsson’s European listed shares climbed as much as 9%.
Contact Sean at sean@proactiveinvestors.com