Samsung has won a $6.64 billion order in the United States from Verizon. The South Korean company secured its first major deal to provide 5G wireless communication solutions since Huawei’s ouster, a big development for the firm in the 5G market.
Verizon and Samsung have been in business prior to the deal, with Huawei out of the way, Samsung became the first choice for Verizon’s 5G wireless solutions.
Nokia and Ericsson became preferred choices of Western countries following the security concerns that are forcing many of them to sever ties with Huawei. But the Verizon deal has introduced a new player in the 5G market.
“Samsung winning the order from Verizon would expand its telecom equipment business abroad, potentially giving leverage to negotiate with other countries,” said Park Sung-soon, an analyst at Cape Investment and Securities.
Huawei leads the 2019 global market share of 5G telecom equipment with 28%, followed by Nokia 16%, Ericsson 14%, ZTE 10%, Cisco 7% and Samsung 3%, according to market research firm Dell’Oro Group.
Samsung did not give details of the deal but said it is for telecom equipment. The contract will run from June 30, 2020 to Dec. 31, 2025, Samsung said, adding that the contract presents them the opportunity to push boundaries of 5G innovation.
“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,” the company said.
The United States has continued to press its allies to boot Huawei out and many are succumbing to the pressure. The United Kingdom has asked the Chinese telecom Giant to stop its 5G deployment in the country, just as France, Canada and some others have done.
However, the decision to kick Huawei out has come at a high cost for countries where Huawei 5G deployment has already taken place. The US Federal Communications Commission (FCC) said removing and replacing equipment made by Huawei and ZTE from their wireless networks will cost US rural telecom operators $1.837 billion.
The United States is on a campaign to replace all 5G equipment installed by Huawei and ZTE with those from companies they can trust.
“By identifying the presence of insecure equipment and services in our networks, we can now work to ensure that these networks – especially those of the small and rural carriers – rely on infrastructure from trusted vendors,” FCC said in a statement.
The FCC said the carriers would be reimbursed for the replacements of Huawei equipment and there is about $1.618 billion for that purpose.
Last month, French telecom operator Bouygues Telecom’s deputy CEO Olivier Roussat announced plans to dismantle 3,000 Huawei-made mobile antennas in France’s highly populated areas by 2028, according to CX Tech.
US mobile operators are expected to start dismantling Huawei’s 5G infrastructures soon, and that creates opportunity for more players in the 5G market.
Samsung’s contract with Verizon sends a message to Nokia and Ericsson that more players are there to contend with in the 5G market.