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Ericsson (ERIC), Chunghwa to Power Orsted Wind Farms' Network

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Zacks Equity Research
·4 min read
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Strengthening its long-lasting partnership, Ericsson ERIC announced that it has joined forces with Taiwan-based leading communications services provider Chunghwa Telecom Co., Ltd. CHT to deploy private networks for Orsted’s Greater Changhua 1 & 2a Offshore Wind Farms. These 4G LTE (Long Term Evolution) private networks will aid the workforce of Orsted, an energy company, to enjoy the perks of a seamless communications infrastructure for its day-to-day operations.

Precisely, this latest move comes as a boon to Taiwanese enterprises, especially at a time when the majority of industries are migrating to integrated private networks for addressing business and mission-critical needs. Further, the alliance will enable Ericsson, a Sweden-based equipment maker giant, to develop its best-in-class capabilities in communications solutions while strengthening its presence in the Asian markets. The outcome should be a win-win situation for both companies.

Ericsson and Chunghwa Telecom’s joint decision to install the private networks at the Greater Changhua 1 & 2a Offshore Wind Farms is primarily made to allow the wind farms, located 35-60 kilometers away from the shore, to utilize the enhanced 4G mobile communications while ensuring the work safety of Orsted’s personnel. Currently, Orsted Taiwan has five offshore wind projects under construction, one of which is Greater Changhua.

Ericsson’s private networks capitalize on the industry-leading 4G LTE and 5G technology that bolsters industrial digitalization with superior performance and secure communications. Its on-premises private networks are equipped with flexible deployment models that are ideally used in various industry verticals, such as utility and manufacturing, among others. Powered by network slicing and edge computing, the solution can be customized according to the needs of various service providers while assisting them to improve the overall network capacity by maximizing the existing spectrum assets.

The companies will deploy 4G LTE network on the frequency bands of 900 MHz and 1800 MHz to tide over the communication woes faced by the wind farms. Impressively, these networks can also function on 5G network, just through a remote software upgrade. This avant-garde feature emerges as an appropriate solution to propel 5G technology and deliver optimal communications to the Taiwanese enterprises. Notably, the deployment is anticipated to be completed by the third quarter of 2021.

Markedly, Ericsson has been sharing an active working relationship with Chunghwa Telecom since 2017. It was selected by the network operator as 5G Core services provider in March 2020. Apart from deploying excellent network services, the telecom operator aims to promote industrial transformation with 5G-backed applications, thereby fast-tracking the overall progress of 5G development in Taiwan. The latest collaboration is a perfect example for underlining Ericsson’s accelerated 5G momentum in Taiwan.

To date, Ericsson has clinched 116 commercial 5G agreements with unique communication service providers, of which 70 are live networks. The company is witnessing a healthy traction in its business, based on the strategy to increase investments in technology leadership including 5G.

The company is confident of meeting the 2020 Group target. 5G will likely accelerate the digital transformation in many industries, enabling new use cases in IoT, automation, transport and Big Data. Evidently, such positive industry trends are expected to bode well for Ericsson in the long haul.

Ericsson currently has a Zacks Rank #3 (Hold). It has a long-term earnings growth expectation of 28.9%. The stock has surged 35.1% compared with industry’s growth of 35.8% in the past year.



Some better-ranked prominent players in the industry are Aviat Networks, Inc. AVNW and Ubiquiti Inc. UI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aviat Networks delivered a trailing four-quarter earnings surprise of 11.8%, on average.

Ubiquiti delivered a trailing four-quarter earnings surprise of 27.9%, on average.

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