Samsung, Verizon Sign $6.65 Billion 5G Contract
September 07 2020 - 5:41AM
Dow Jones News
By Elizabeth Koh
SEOUL-- Samsung Electronics Co. has signed a $6.65 billion
contract with Verizon Communications Inc. for network equipment and
services, a major boost to the South Korean firm's quest to become
a key 5G supplier.
Samsung's agreement with Verizon runs through the end of 2025
and primarily covers 5G infrastructure, though it broadly includes
network-equipment sales, installation and maintenance, according to
a Monday corporate filing in South Korea. Samsung declined to
specify how much of the deal is directly related to 5G.
Verizon didn't immediately respond to a request for comment.
The Verizon deal could help bolster Samsung's credibility with
carriers in an important year for 5G rollouts, especially in the
U.S., analysts said. Adoption of the next-generation technology is
expected to expand significantly after the expected launch later
this year of Apple Inc.'s first 5G-enabled phone.
Global adoption of the next-generation phones has been delayed
by the coronavirus pandemic. Handset makers are already dropping
prices for 5G devices, looking to entice skeptical buyers.
Among 5G network sales, Samsung ranks No. 4 with about 13% of
the total market, according to market research firm Dell'Oro Group.
It trails the top three, which include China's Huawei Technologies
Co. and the European firms Ericsson AB and Nokia Corp.
Huawei said early this year that it had signed more than 90 5G
contracts, and Ericsson last month touted its 100th 5G "commercial
agreement." Samsung hasn't divulged how many 5G contracts it has
signed. But it has high hopes, having invested more than $30
billion in the U.S. market alone.
Samsung said in 2018 that it aimed to capture one-fifth of the
global 5G market by next year. It is a key growth area for the
South Korean conglomerate, along with advanced semiconductors and
biopharmaceuticals.
The firm's ambitions have been given a major boost by
Washington's campaign to limit Chinese rival Huawei, as the U.S.
pushes allies to forego Huawei gear over national-security
fears.
Verizon joined with Samsung long before 5G made its debut in
smartphones last spring. In early 2018, the two firms teamed up for
trial runs of 5G-powered home internet. Verizon officials have
previously pledged not to use Huawei for its next-generation
rollout. Samsung has supplied some network gear for prior
generations including 4G LTE.
To Samsung, the deal represents a major 5G win. The contract,
valued at 7.898 trillion South Korean won over five years, compares
with the roughly 5 trillion won Samsung's network business racked
up in revenue in all of 2019.
Last year, 5G represented less than half of Samsung's network
business, of which U.S. carriers accounted for 10%, said S.K. Kim,
a Seoul-based analyst with Daiwa Securities.
"With this latest long-term strategic contract, we will continue
to push the boundaries of 5G innovation to enhance mobile
experiences for Verizon's customers," Samsung said in a
statement.
Write to Elizabeth Koh at Elizabeth.Koh@wsj.com
(END) Dow Jones Newswires
September 07, 2020 05:26 ET (09:26 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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