Can Ericsson's Network Enhancement Deal With SoftBank Aid Its Shares?

Ericsson ERIC has strengthened its long-standing partnership with SoftBank Corp by signing a long-term agreement to upgrade and expand its core network in Japan. The alliance highlights Ericsson’s increasing importance in cloud-based 5G technology and its role in building advanced telecom systems.

Per the deal, Ericsson will deploy its dual-mode 5G Core solution, built on its Cloud Native Infrastructure Solution. This platform allows SoftBank to seamlessly integrate both 4G and 5G services while accelerating its transition to 5G Standalone and improving network performance, reliability and service quality by deploying solutions, such as User Data Consolidation, policy control systems and cloud-based IP Multimedia Subsystem.

Ericsson’s modernization effort also includes upgrading subscriber data management with cloud-native architecture and enhancing IP Multimedia Subsystem capabilities to improve voice and multimedia services, while using automation and cloud technologies to simplify operations, reduce costs, speed up new service launches and lower energy consumption.

As telecom operators adopt cloud-based and AI-driven networks, Ericsson is playing an important role in shaping the future of connectivity. With this deal, the company will help accelerate 5G growth in Japan while reinforcing its importance in driving innovation and efficiency in the telecom industry.

How Are Competitors Faring?

Ericsson faces stiff competition from Nokia Corporation NOK and Cisco Systems, Inc. CSCO. Nokia is expanding its 5G business by signing new network deals and upgrading telecom infrastructure in different countries. It is also focusing on artificial intelligence (AI)-driven networks through partnerships with companies like NVIDIA Corporation NVDA, aiming to develop advanced 5G and future 6G technologies.

Cisco is focusing on AI-powered network solutions to help telecom companies manage growing data demand. It is also working with Reliance Jio, AMD and Nokia to build smarter telecom networks. The company has also launched a new AI-based chip, Silicon One G300, to improve network performance and support the growing AI market.

ERIC’s Price Performance, Valuation & Estimates

Ericsson shares have gained 42.1% over the past year compared with the industry’s 42.8% growth.

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From a valuation standpoint, Ericsson trades at a forward price-to-sales ratio of 1.44, below the industry tally of 4.68.

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Earnings estimates for 2026 have increased 3% to 68 cents over the past 60 days, while the same for 2027 have increased 3% to 71 cents.

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Ericsson currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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