Samsung has announced that it has clinched a deal to supply network equipment to US wireless carrier Verizon. Samsung Networks, the network equipment manufacturing arm of the South Korean conglomerate will supply "wireless telecommunication solutions" worth KRW 7.9 trillion (around $6.6 billion) to the American wireless provider over the next five years. The contract will run through December 2025.
"We are pleased to expand our long-standing partnership with Verizon to advance their next-generation network evolution. 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," Samsung said in a statement.
"We're excited to continue delivering on breakthrough network technologies that will expand what's possible through 5G," the company added. Verizon has been Samsung's customer in the past as well.
Samsung strikes its biggest-ever network equipment deal with Verizon
Following the US sanctions on Chinese telecommunications giant Huawei, Samsung has been steadily expanding its network infrastructure business globally. In the recent past, the South Korean company has secured network equipment supply deals with carriers in South Korea, Canada, Japan, New Zealand, the UK, and the US.
The recent deal with Verizon, however, is the biggest contract Samsung Networks has ever received. The size of the contract is even larger than the business' annual sales. Analysts estimate Samsung Networks' annual sales to be worth around four to five trillion won. This contract is equivalent to 3.43 percent of Samsung's full-year sales of 2019, which sits at around 230 trillion won.
A majority of this wireless telecommunication solutions deal will involve 5G technologies. Samsung and South Korea were among the firsts to flip the switch on commercial 5G networks and the company has been at the forefront of this transition to 5G ever since. Not just networking equipment, but Samsung is leading the evolution with its 5G-enabled mobile devices as well.
Huawei, meanwhile, despite its troubles, is still a dominant force in the global 5G network infrastructure market. Samsung Networks has been struggling to expand its presence in markets like India, where Ericsson and Nokia are emerging as its main rivals. This has added to the Korean giant's inability to catch up with the Chinese company.
The COVID-19 pandemic has also hindered Samsung's progress. 5G network infrastructure development slowed down because of the global health crisis and that was reflected in Samsung Networks' business in the first half of the year.
Samsung is now aiming to turn around the business in 2021 and it may have just received a much-needed boost. This deal with Verizon may help the company secure more network deals around the world in the future.