Will the $14bn order cost Ericsson $10bn to replace Nokia’s equipment?

In a ground-breaking move, AT&T has selected Ericsson as the primary supplier for its Open RAN equipment, set to handle 70% of its wireless traffic by the close of 2026. The five-year agreement, valued at an impressive $14 billion, signals a significant shift in the North American telecommunications landscape. Under the deal, Ericsson will replace some of Nokia’s equipment in specific areas of AT&T’s network.

The question raised by Light Reading, a B2B digital media platform, part of Informa Tech is AT&T will now have to replace a huge amount of Nokia kit. Much of it has not fully depreciated. Indeed, some of the technology appears relatively new. “One estimate shared with this publication puts swap-out costs at about $10 billion, including between $6 billion and $7 billion on replacement equipment and related service charges (with the rest spent on Nokia write-offs and meeting contractual obligations with the Finnish supplier). And a single RAN deal on these $10 billion terms would be madness, even for a company that wasted at least $40 billion on a takeover of Time Warner,” says the article.

Iain Morris, the author of the article further says, “Which means Ericsson foots the bill. Which, by implication, means Ericsson’s other customers are paying for it. This is pure conjecture, of course. But it is hard to rationalize it in any other way, even if you buy into AT&T’s pitch about open RAN.”

CT Bureau