Vodafone Australian Unit Picks Nokia As 5G Network Vendor

Vodafone Group Plc’s (NASDAQ:VOD) Australian telco arm — Vodafone Hutchison Australia — recently inked an agreement with Nokia (HE:NOKIA) Corporation (NYSE:NOK) to improve the existing 4G network and deploy 5G technology across the country. Marking a significant milestone, the partnership is expected to enable Vodafone to track its 5G delivery and establish commercial 5G sites encompassing Australian suburb, Paramatta, by leveraging 5G capabilities of the Finnish telecom equipment maker.

Vodafone Hutchison Australia is an equally proportioned joint venture between Vodafone Group Plc and Hutchison Telecommunications (Australia) Limited. With operations in Melbourne, Sydney, Adelaide, Brisbane and Perth, the telecommunications and Internet service provider deliver fixed broadband and mobile services in designated regional centers, covering more than 22 million customers in Australia.

The deal comes at a time when Australian Competition and Consumer Commission is attempting to block $10.5 billion blockbuster deal between TPG Telecom and Vodafone Hutchison Australia. The antitrust watchdogs cited that the merger will apparently affect customers by threatening competition and escalating costs through monopolistic trade practices. Moreover, the decision is an outcome of Australia government's ban on 5G equipment of China-based Huawei, with whom TPG Telecom had earlier inked a deal.

The Australian government banned Huawei and ZTE (HK:0763) in a national security-based decision to thwart foreign vendors from taking part in the deployment of 5G network infrastructure across the nation. As a result, the trade restrictions are likely to create new business opportunities for other telecom equipment manufacturers like Nokia, Ericsson (NASDAQ:ERIC) and Spark New Zealand Limited.

Markedly, the collaboration will deploy avant-garde mobile network services in the first half of 2020 and is anticipated to be functional for at least five years. This, in turn, will allow Vodafone to scale up its 5G requirements and place orders with Nokia for site delivery. Apart from delivering high-quality 5G services, the deal will include the deployment of IP/Optical, 5G radio access network and managed services to its Australian customers.

Vodafone has long-term earnings growth expectation of 14.5%. Driven by strong execution of operational strategies, the stock has rallied 21.6% against the industry’s decline of 2% in the past six months.

Vodafone currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the industry is BlackBerry Limited (NYSE:BB) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BlackBerry surpassed estimates twice in the preceding four quarters, the average positive earnings surprise being 68.8%.

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