Samsung eyes 5G work in US and Europe next year after tough 2024Samsung eyes 5G work in US and Europe next year after tough 2024

Ever since it snatched a $6.6 billion contract with Verizon from under the nose of a not-so-hot Nokia, Samsung has had heavyweight status in 5G. The mega deal was announced in September 2020, when 5G was excitingly young and Nokia was still firefighting product problems. Energized by its Verizon success, courted by Vodafone in Europe, the South Korean company looked destined to win many more deals outside its domestic market.

It has not quite happened. Sales at the Samsung Networks business soared 29% in 2021, to 4.58 trillion South Korean won (US$3.3 billion), and another 18% the following year, to KRW5.39 trillion ($3.9 billion). But the Verizon contract did not trigger a telco stampede toward Samsung. Its network revenues tumbled 30% in last year's frosty 5G climate, much steeper than the 11% decline in market revenues calculated by Omdia, a Light Reading sister company. Results show they have dropped another 27% year-over-year for the first nine months of 2024.

(Source: Samsung, Light Reading)

But talks with current and prospective customers have led Samsung to believe 2025 will be much better. It is confident of an acceleration in network activity by Verizon, which still appears not to have completed the switch from Nokia to Samsung at about 10,000 mobile sites. "They've got some C-band buildout targets that are quite aggressive," said Alok Shah, the vice president of strategy, business development and marketing for Samsung Electronics America. Next year, Verizon plans to invest between $17.5 billion and $18.5 billion in capital expenditure, up from the $17 billion to $17.5 billion range for 2024.

Shah is also hopeful of securing additional revenues from Boost Mobile, the brand used by Dish Network. "Boost, another major Samsung customer, is kind of turning the corner, I would say, in terms of their overall business strategy and financials," he said. The company, which is building a fourth mobile network across the US, previously signed a deal with Samsung for the provision of radios and software.

But Dish's financial situation must still look precarious to many observers. A recent filing with the Securities and Exchange Commission showed the operating loss on its 5G network deployment had widened to more than $1.7 billion for the first nine months – a 46% year-over-year increase. At group level, Dish racked up an operating loss of $130 million despite recording sales of $10.7 billion.

Another boost from Spring 6?

Outside North America, Samsung is also sniffing around opportunities in Europe. It is widely expected to emerge as one of the big winners from Spring 6, Vodafone's ongoing tender for tens of thousands of sites in Europe and Africa. Vodafone has reserved 30% of the European footprint for a shift to open RAN (or O-RAN), whose new interfaces are designed to facilitate the pairing of different vendors at the same mobile site, and Samsung has already shown up in several deals with Vodafone's European subsidiaries. Those include open RAN deployments in the UK and Romania.

Until now, work to replace China's Huawei at about 2,500 sites in the UK has appeared slow-going. Only about 100 have been swapped so far, according to one source. A long-running UK investigation into Vodafone's planned merger with Three, cited as an "external factor" by Shah, may bear some blame for what looks like a pause in network activity while the operators await a decision. Samsung stands to benefit from the merger's likely approval early next month.

Elsewhere in Vodafone's European infrastructure, Samsung has also been active in German trials of open RAN. "That's a market where there are certainly geopolitical aspects," said Shah. "There is government guidance around untrusted vendors where we think O-RAN may have a positive impact."

Under rules published in the summer, German authorities will allow telcos to retain Huawei's 5G basestation hardware and software provided they find an alternative for the Chinese vendor's management system. "If you look at the need for open interfaces around network management, that plays into some of the areas where O-RAN is headed – maybe not the fronthaul piece but maybe other aspects of O-RAN," said Shah.

The comments suggest Samsung might be willing to provide a system that can be used to manage Huawei's RAN. It's a role Ericsson and Nokia may be less eager to play. They arguably have more to lose from Germany's prolonged use of Huawei and would probably resist any collaboration with a major rival, especially when its goal is to secure Huawei's presence in German networks.

Deutsche Telekom, Germany's biggest operator, seems to have been developing its own management system for this purpose. But Vodafone sounds more interested in steering vendors than it is in building its own service management and orchestration (SMO) platform. "It's now the time to influence where things are going, no matter who you go with," Paco Pignatelli, Vodafone's open RAN head, recently told Light Reading.

Shah says he is "cautiously optimistic" that Germany will develop into an "interesting opportunity" for Samsung. Meanwhile, on the opposite side of the world, a 5G deal with Japan's KDDI, the details of which have not been made public, could also buoy sales in 2025.

Indian setbacks and DIY dilemmas

Less positive, and the reason Samsung's market share fell 1.5 percentage points last year, is the India situation. Having been the sole provider of 4G RAN products to Reliance Jio, Samsung lost out to Ericsson and Nokia when India's biggest telco was awarding 5G contracts. And while Samsung counts rival telcos Bharti Airtel and Vodafone Idea as new customers, its share of their 5G network footprint is still relatively small.

There is also the risk more telcos opt to build their own technologies and even try to sell them. Deutsche Telekom's SMO plans are just one small example of this. Through a subsidiary called OREX SAI, Japan's NTT Docomo is now marketing a homegrown SMO platform to other telcos, including operators in Germany. Rival SoftBank has part-developed its own RAN software in alliance with chips giant Nvidia. Vietnam's Viettel has done something similar with Qualcomm. India's Jio has a homegrown core network and aspirations to be a vendor of 5G products to other telcos.

But Shah evidently doubts many such efforts will enjoy much success. "What Viettel is doing around homegrown equipment is really quite interesting, but I don't know how much it scales," he said. "There's a reason we're horizontally broken up into service providers and vendors – it's difficult to be vertically integrated in that way and to scale it."

Next year's market environment remains clouded by uncertainty. Among other things, the re-entry into the White House of Donald Trump could have ramifications for telcos still reliant on Chinese vendors. But Shah sounds determined not to count heavily on external factors. "I think our philosophy has always been that if your business strategy is tied too closely to geopolitical decisions you're probably in a bad spot," he said. Whatever the political weather, without a healthier telco appetite for spending, the tough times could last.