Brington Investment Limited - Nokia falls as Ericsson rises after AT&T buys it for $14 billion

Nokia (NOK) American depositary receipts (ADRs) plummeted more than 5% in early trade Tuesday, while Ericsson (ERIC) jumped 1.6% after AT&T (T) selected Ericsson for a $14 billion agreement to update its cellular network.
KOWLOON, Hong Kong - Dec. 8, 2023 - PRLog -- AT&T's stock was up 3%.

AT&T, one of the world's leading telecommunications corporations and one of the top infrastructure investments in the United States across cellular and broadband fiber, described the move as a "strategic industry shift." Over the course of the five-year agreement, AT&T will collaborate with Ericsson to build an open radio access network (Open RAN) in the United States that will handle 70% of the industry giant's wireless network traffic by late 2026.

The move represents a major change in AT&T's network infrastructure strategy, with the company shifting away from conventional proprietary RAN solutions and toward a more open and flexible approach. Open RAN is projected to provide various benefits, including lower costs, more vendor variety, and improved network agility.

The purchase, however, marks a significant setback for Nokia, as it may have an influence on the company's revenue and market share, with AT&T accounting for 5-8% of Nokia's mobile networks net sales in 2023.

Cost-cutting actions, according to Nokia, might partly offset the effect of AT&T's move, but could push the company's aim of attaining a double-digit operating margin in its mobile networks segment back by up to two years.

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