Ericsson, VimpelCom Ink $1B Digital Transformation Contract

Swedish communication technology and services giant Ericsson (ST:ERICAs) (NASDAQ:ERIC) made a noteworthy win as it entered into a $1 billion software partnership with international operator VimpelCom Ltd. (NASDAQ:VIP) . Under the contract, Ercisson will facilitate end-to-end digital transformation for the telecom operator's global IT infrastructure.

VimpelCom will leverage Ericsson’s new software and cloud technologies to digitize its business support systems infrastructure. The contract calls for a comprehensive overhaul of VimpelCom’s IT infrastructure across 11 countries, starting with Georgia, Bangladesh, Algeria, Pakistan, Ukraine and Russia.

Ericsson will digitize and globalize VimpelCom’s Business Support Systems infrastructure by implementing, operating and managing cloud-based digital systems that are better suited to the company’s clients. It will introduce near real-time analytics and Digital Stack, which will accelerate product and service development and help reduce time-to-market.

Also, the move will help to cut costs and improve control of operations as it will bring operations across countries under one system.

Ericsson’s capabilities will help VimpelCom prepare for the rollout of 4G and 5G services, and also provide digital offerings such as mobile entertainment and mobile financial services.

IT systems play a crucial role in today’s world, as operators continually seek more tightly integrated networks and business processes. Ericsson has been at the forefront of this digital transformation and offers a wide range of telecom IT managed services.

Ericsson has been persistently seeking opportunities to expand its footprint in the global telecom IT industry. Last month, Ericsson won another major long-term contract with UAE-based telecommunications operator, du to manage and operate the latter’s IT infrastructure.

Such deals strengthen the company’s foothold in the market, expand its reach into new geographies and boost its core business, thereby driving growth.

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However, stiff competition and currency fluctuations have been weighing on this Zacks Rank #4 (Sell) company’s performance lately. Ericsson is also grappling with waning sales in some key end-markets, slowdown in 4G deployment in China and ongoing industry consolidation among customers and major rivals.

Some better-ranked stocks in the same space include Sonus Networks, Inc. (NASDAQ:SONS) and Clearfield, Inc. (NASDAQ:CLFD) , both carrying a Zacks Rank #2 (Buy).