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Samsung Wins $6.6 billion Verizon 5G Contract, Beating Ericsson and Nokia

By Anders Bylund – Sep 7, 2020 at 3:58PM

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The South Korean electronics giant is making inroads into the telecom infrastructure market.

South Korean electronics veteran Samsung (OTC: SSNLF) scored a big win this week when American telecom Verizon Communications (VZ 1.29%) selected the company as a provider of 5G wireless networking equipment. This five-year deal adds up to $6.6 billion of orders, involving networking hardware and related services.

The Verizon contract was signed on Friday, according to regulatory filings seen by Bloomberg. To put this agreement into perspective, Verizon's capital expenses added up to $22 billion over the last four quarters. It's a large deal and a dollar-based vote of confidence from Verizon, which could inspire other telecoms around the world to at least consider Samsung's 5G equipment.

A fully populated cell tower in silhouette against a colorful sunrise.

Image source: Getty Images.

That's potentially bad news for the established leaders of this segment. The U.S. stock market was closed on Monday, but Labor Day is a uniquely American holiday, and investors had their say on international stock exchanges. Samsung's shares closed Monday's trading 1.6% higher on the Seoul exchange; Nokia (NOK 3.32%) closed the day 3.3% lower in Helsinki; and Telefonaktiebolaget LM Ericsson (ERIC 3.55%) dropped as much as 1.1% lower in Stockholm before climbing back to breakeven at the end of the day. Chinese technology giant ZTE dipped 4.3% lower on the Hong Kong exchange, and larger rival Huawei may also suffer, but that government-held company is not trading stock on any market.

Nokia, Ericsson, and Huawei are the leading providers of 5G base stations so far, but Samsung and a number of smaller players have been siphoning market share from the Big Three in 2020, and Verizon's choice can only accelerate that trend.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Nokia Corporation Stock Quote
Nokia Corporation
$4.36 (3.32%) $0.14
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
$39.39 (1.29%) $0.50
Telefonaktiebolaget LM Ericsson (publ) Stock Quote
Telefonaktiebolaget LM Ericsson (publ)
$5.94 (3.55%) $0.20

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