Did Ericsson push CommScope out of AT&T too?

According to one top industry analyst, there is a good chance that Ericsson managed to steal some or all of CommScope's passive antenna business at AT&T.

"IF CommScope also ended up like Nokia and was shut out of the passive antenna opportunity with AT&T, this would be a SEVERE BLOW to the head for the company's OWN (outdoor wireless networks) business unit and overall financial outlook," analyst Earl Lum, of EJL Wireless Research, wrote on LinkedIn.

Officials from CommScope and AT&T didn't respond to questions from Light Reading about their relationship. Officials from Ericsson declined to comment.

CommScope's woes

CommScope has been struggling with a decline in demand for its products recently. Although other vendors have reported of a similar downturn, CommScope's situation is so extreme that some financial analysts have warned about potential bankruptcy. AT&T is listed among CommScope's major customers along with about a dozen other companies.

Sales in CommScope's OWN business unit – which includes basestation antennas, radio frequency (RF) filters, microwave antennas and other products – fell 45% year over year in the third quarter of 2023. The division is now the smallest of CommScope's five business units in terms of net sales.

Lum noted that Ericsson has been able to compete directly with CommScope globally for mobile network operators' passive antenna business because of its acquisition of Kathrein's mobile infrastructure antenna group in 2019.

"IF Ericsson was as aggressive on the passive antenna side as it was on the active RAN [radio access network] equipment side, then we conclude that CommScope was just unable to bid as low as Ericsson, given CommScope's overall current financial situation," Lum wrote.

Indeed, AT&T's CEO last week confirmed that Ericsson offered significant discounts to win the operator's business.

Reading the tea leaves

Lum's opinion on CommScope is worth noting because he correctly predicted that AT&T would dump Nokia. Several days after Lum said AT&T would do so, the company announced it was going with Ericsson. 

Specifically, AT&T last week said it would spend up to $14 billion with Ericsson over five years in a move to open RAN network technology, a move that represented a snub of AT&T's other 5G supplier, Nokia.

"We're going to shorten the lives of our Nokia equipment as we replace it with Ericsson," confirmed AT&T CFO Pascal Desroches at an investor event this week. "So that's going to result in some incremental depreciation for next year, non-cash depreciation."

Embracing open RAN

According to Lum, Nokia supplies roughly 35% of the radios for AT&T's nationwide wireless network, which stretches across a total of around 50,000 to 60,000 cell sites. Ericsson currently supplies the radios for the remaining 65%. 

Now, under AT&T's new agreement with Ericsson, it appears that Ericsson will dismantle some or all of Nokia's estimated 17,500 - 21,000 radios in its network. Ericsson is expected to replace them with its own radios or potentially radios from Japan's Fujitsu and other suppliers.

Indeed, the ability to slot new vendors into its network is part of the reason AT&T inked its new agreement with Ericsson. Open RAN technology promises to create interoperable interfaces between networking components, allowing operators to snap new components into their networks in a way that was previously impossible when equipment suppliers used proprietary interfaces.

"We just right now think that this creates enormous optionality for the overall industry, and hopefully it creates much more innovation in an area that, candidly, I don't think we have innovated fast enough," AT&T's Desroches said of the operator's new agreement with Ericsson.