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Verizon Offers $6.6B Network Equipment Contract to Samsung

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Verizon Communications Inc (NYSE:VZ). VZ recently offered a $6.6 billion worth contract to Samsung Electronics (OTC:SSNLF) to provide communication equipment for its wireless network. Although the finer details are yet to be revealed, the deal is reportedly one of the biggest of its kind secured by the South Korean firm in the next-generation 5G network market.

With Huawei losing ground due to various trade restrictions imposed by the Trump administration, and Nordic firms Nokia (NYSE:NOK) Corporation NOK and Ericsson (BS:ERICAs) ERIC gaining precedence, the contract win assumes great significance for Samsung (KS:005930). The deal is likely to strengthen its presence the global total telecom equipment market and could make way for similar deals in the near future. In addition, it is likely to give Samsung a leverage to better negotiate with other countries for high-quality 5G network equipment and realign the segment at the expense of its Chinese counterpart.

Notably, Verizon was the highest bidder in the latest spectrum auction for the 3550-3650 MHz bandwidth held by Federal Communications Commission on Aug 25. The company bid for $1.9 billion to speed up the deployment of 5G services, followed by DISH Network Corporation (NASDAQ:DISH) DISH, Charter Communications (NASDAQ:CHTR), Inc. and Comcast Corporation (NASDAQ:CMCSA) with bids of $913 million, $464 million and $459 million, respectively.

With one of the most efficient wireless networks in the United States, Verizon continues to deploy the latest 4G LTE Advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investment. Verizon has been aggressively forging ahead to expand its fiber optics networks to support 4G LTE and upcoming 5G wireless standards as well as wireline connections. The company remains focused on making necessary capital expenditures in order to support the increased demand for network traffic.

Moving forward, Verizon is likely to benefit from a disciplined network strategy, including accelerated 5G deployment despite economic uncertainties stemming from the COVID-19 crisis. The wireless operator is building the 5G home solution and mobile edge computing on the same network and expects to witness strong momentum in the second half of 2020. At the same time, Verizon is focusing on build-out of its 5G Ultra Wideband network, deployment of fiber assets across the country and shift toward Intelligent Edge Network architecture.

The 5G Ultra Wideband network uses a millimeter-wave spectrum and is designed to provide customers significantly faster download speed and greater bandwidth compared with 4G. Verizon’s 5G mobility service offers an unparalleled experience that impacts industries as diverse as public safety, health care, retail and sports. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.

Shares of the company have gained 3.1% in the past year compared with the industry‘s rally of 3.4%.

Verizon presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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