Ericsson (ERIC) To Help Telenor Serbia Transform Digitally

Premium communication technology and services behemoth Telefonaktiebolaget LM Ericsson (ST:ERICAs) (NASDAQ:ERIC) was recently selected by Telenor Serbia, an operating unit of mobile operator Telenor Group, for the transformation of its charging and billing system.

Ericsson’s CBiO to Boost Telenor Serbia’s Profits

Per the deal, Ericsson will be offering the Charging and Billing in One (CBiO) solution to help Telenor Serbia to meet the charging and billing needs of its residential, corporate, mobile and fixed subscribers. Ericsson’s convergent billing system will also help Telenor Serbia provide a wider range of promotions, discounts, incentive programs, targeted campaigns and so on.

Further, it will allow Telenor Serbia to launch new offerings in the market, providing it with the opportunity to boost profits. For customers, all these additional services will translate into higher satisfaction and better cost control. This deal is thus a strategic one, reflecting Ericsson’s “CBiO live reference” debut in Europe and Serbia’s first ever convergent charging and billing system.

Ericsson’s contribution in Telenor Serbia’s digital transformation mirrors the growing popularity of its business support systems ("BSS") business line. As a matter of fact, the company has gained a strong foothold in the BSS space, following the acquisition of Telcordia in the first half of 2014. In the second half of 2015, Ericsson signed license agreements with Systems, Inc. (NASDAQ:CSCO) and Tektronix Communications to enhance its position in this market. Both the agreements, effective Aug 2015, will run through three years. Ericsson believes that increased focus on customer satisfaction will compel operators to enhance their BSS solutions, which bodes well for growth.

Stock Losing Ground

Despite the lucrative contract wins and strength in LTE networks and 4G business lines, Ericsson’s shares have lost almost 25% year to date. Of late, the company is grappling with a host of macroeconomic issues including currency fluctuations, waning sales in some key end-markets, slowdown in 4G deployments in China, among others.

Also, stiff competition and the ongoing industry consolidation among customers and major rivals are adding to the woes of this Zacks Rank #4 (Sell) company. In addition, escalating restructuring charges in Networks and Global Services business segments and the ongoing corruption claims related to its business in China are likely to pose as major headwinds for the company’s upcoming financial release on Jul 19.

Better-ranked stocks in the sector include Clearfield, Inc. (NASDAQ:CLFD) and QUALCOMM Incorporated (NASDAQ:QCOM) . Both the stocks carry a Zacks Rank #2 (Buy).