T-Mobile US has signed two 5G equipment deals with Nokia and Ericsson, both of which carry multi-billion-dollar valuations.
The deals highlight both its desire to take a leadership position in 5G in the US, regardless of the cost, and the extent to which US mobile operators will have to open their wallets in order to roll out the technology.
The two agreements, which cover hardware, software and services, come hot on the heels of an announcement from T-Mobile US that it will tap the bond markets to the tune of $3 billion in order to fund the acquisition of new spectrum.
As we reported earlier in the week, T-Mobile is among 57 qualified bidders battling it out for a share of the 3.7 GHz band in the US that is currently occupied by satellite incumbents. The running total in the auction is now creeping up fairly slowly, hitting $80.91 billion after round 87 on Wednesday, just over $100 million more than it had reached 48 hours earlier. But still, that’s a shade under $81 billion, much of which will be shared between the country’s big players, and that’s before factoring in the $13 billion clearance payments due to the satellite companies.
And then, of course, there’s the cost of rolling out networks.
Neither Ericsson nor Nokia disclosed the value of their deals with T-Mobile, but the operator itself made no secret of the fact that each one was worth in the multiple billions of dollars. And those are just two of many deals that will be signed by T-Mobile and its competitors over the course of 5G rollout.
Indeed, both deals build on existing 5G partnerships between the vendors and the operator.
Ericsson said its five-year deal with T-Mobile will see it supply equipment, software and related services to expand and enhance the telco’s 5G footprint. This will include active and passive antennas that will work across T-Mobile’s whole spectrum portfolio, be it low-band for coverage or higher band for high speeds and low latency, backed by Massive MIMO. The announcement comes a couple of years after Ericsson and T-Mobile inked their first major multi-year 5G hardware and software deal, which came with a $3.5 billion price tag.
Similarly, Nokia has brokered a new five-year deal with T-Mobile that their ongoing relationship. The Finnish vendor said it will supply its AirScale Radio platform to deploy an Ultra Capacity (capitals its own) 5G layer with 2.5 GHz Massive MIMO technology. In addition, it will continue to expand the telco’s low-band coverage.
“Both the extended range and Ultra Capacity enhancements will augment user experience and network capacity by leveraging T-Mobile’s multi-layer spectrum strategy,” Nokia said.
T-Mobile, and its rivals, need those varying spectrum bands for effective 5G rollout. But the costs are really mounting up.