In a significant development, Samsung Electronics has won a $6.64 billion order to provide wireless communication solutions to Verizon in the United States.
The development marks the bagging of a major order by the South Korean company in the burgeoning 5G telecommunications market.
The company’s global prospects have risen significantly following U.S. sanctions on Huawei, said analysts.
In July 2019, Verizon’s CEO Hans Vestberg had told CNBC that the company does not use any equipment from Huawei. Incidentally, Verizon has been Samsung’s customer even prior to this contract.
According to a note from analysts at JP Morgan, Verizon is Nokia’s biggest customer.
“Samsung winning the order from Verizon would help the company expand its telecom equipment business abroad, potentially giving leverage to negotiate with other countries,” said Park Sung-soon, an analyst at Cape Investment and Securities.
The order is for network equipment, said a Samsung’s spokesman.
Samsung declined comment on the details of the contract.
“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,” said Samsung in a statement.
In a regulatory filing, Samsung disclosed that the contract period is from June 30, 2020 to December 31, 2025.
In 2019, the South Korean giant had a 3% market share in the global total telecom equipment market.
According to market researcher Dell’Oro Group, as of 2019, Huawei’s was the No.1 player with a market share of 28%, followed by Nokia, which has a market share of 16%, followed by Ericsson’s 14%, ZTE’s 10% and Cisco’s 7%.
Huawei’s market share is likely to slump with more countries opting for privacy rather over costs, thus purging Huawei’s equipment from upcoming 5G networks. Huawei’s fall is creating new suppliers including Samsung Electronics and NEC.
With the news reaching the market, shares of Samsung Electronics rose by 2% compared to the wider KOSPI’s 0.5% climb.