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Samsung Signs $6.6 Billion Deal with Verizon to Supply Network Equipment

Samsung Electronics Co Ltd (KRX: 005930) recently won a $6.6 billion order from Verizon Communications Inc (NYSE: VZ). With this new development, the electronic company will provide wireless communications solutions to Verizon in the U.S.

On Monday, Samsung unveiled its latest win with Verizon, which will help the electronics company’s growth in the 5G network market.

An analyst at Cape Investment and Securities, Park Sung-soon, commented on the recent development. He believes the new deal will help Samsung expand its network equipment beyond its home country: 

“Samsung winning the order from Verizon would help the company expand its telecom equipment business abroad, potentially giving leverage to negotiate with other countries.”

Apart from revealing that the order is for network equipment, Samsung is not willing to give details on the contract. In a statement, the company said:

“With this latest long-term strategic contract, we will continue to push the boundaries of 5G innovation to enhance mobile experiences for Verizon’s customers.”

In addition, Samsung has revealed the period of the contract through a regulatory filing. According to the filing, the deal between the two companies started on the 30th of June. The contract will last for five years to end on the 31st of December 2025.

Currently closed at KRW56,500, Samsung has climbed 20.47% in the past year. In 2020, the company increased by 1.25%, 2.91% in the last three months, and nearly 5% in the last five days. Also, in 2019, Samsung had 3% of the global total telecom equipment market share. At the moment, the electronic company boasts of a market value of KRW371.01 trillion.

Apart from Samsung, other technology companies also had significant percentages of the global market share in 2019. Examples are Huawei (28%), Nokia (16%), Ericsson (14%), ZTE (10%), and Cisco (7%). 

Despite recent gains, however, the South Korean tech giant declined over 2% in the past month.

Before now, Samsung has been investing in the 5G network market to provide telecom equipment with other competitors such as Nokia, Ericsson, and Huawei. Now, Samsung’s network business is improving more amid the U.S. sanctions on Huawei Technologies, a major rival of the South Korean company.

Since last year, the company has been making plans to invest in the 6th generation (6G) network. The Samsung vice chairman, Jay Y. Lee, revealed this as one of the future investments of the electronic company.

In 2020, Samsung has made several announcements. In July, the company revealed plans to release the Galaxy A71. The offering will be the cheapest 5G-enabled phone, and will be priced at $599.99. Described as an “innovation in everyday essentials,” the company said that versions of the phone would be available later through Verizon and AT&T.

Furthermore, a recent Bloomberg report showed that Verizon was among the top winners in a U.S. auction of airwaves. As one of the winners, the Federal Communication Commission revealed that Verizon now has the rights to use 5G-supported frequency.

Along with Verizon Communication Inc was Dish Network Corp, who also won in the auction. Others were Charter Communication Inc and Comcast Corp.

Samsung Signs $6.6 Billion Deal with Verizon to Supply Network Equipment

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