Ericsson (NASDAQ: ERIC) is set to extend its services to Siberia and the Urals after signing a five year deal with leading Russian telecommunications firm VimpelCom Ltd. (NYSE: VIP). After the deal with VIP is signed, Ericsson, will be taking over more than 10,000 kilometers of optical cables in over 41 cities in Russia. The company will also manage the network operations and maintenance facilities for the fixed and mobile networks that currently fall under the administration of VimpelCom. The contract will boost the valuation and sales for both VIP and ERIC. Both companies will benefit immensely from reduced costs and extended market reach that will result from the strategic partnership.
Ericsson is one of the leading wireless carrier providers in Europe and the deal with VimpelCom will definitely fuel the company’s savings and make way for larger growth in the market. Aside from VimpelCom, Ericsson has also managed to nab a $1 Billion deal with Reliance Communications Ltd. (OTN: RLCMY), which is one of the leading telecom operators in India. These recent deals will give ERIC leverage and help it stay ahead of main competitors in the market like Qualcomm Inc. (NASDAQ: QCOM), Aviat Networks Inc. (NASDAQ: AVNW) and Juniper Networks, Inc. (NYSE: JNPR).
Ericsson already has a strong hold over the telecommunications industry in general, and outsourcing its services to extended markets is one factor that will account for higher share prices in the coming few weeks. With a 4 percent increase in its revenue last year and an augmented and profitable growth expected in the next quarter as well, this is one stock to look out for.
The telecommunications industry, which saw market saturation and reduced profits in the last few quarters, is expected to bounce back in the next several quarters. When looking at emerging growth companies in this sector keep Consolidated Communications Holdings Inc. (NASDAQ: CNSL) and Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) in mind. Though relatively newer in the market, these stocks have the potential to yield decent dividends and significant growth in the industry during the next couple of months. With its dividend yield of 10.4 percent and a low share price, Consolidated Communications might be a good bet. Especially suited for long term investors, the valuation of these stocks is nice. Another name to watch is General Communications, Inc. (NASDQ: GNCMA). General Communication has recently signed a deal with Alaska Communications which has the potential to increase shares valuation in both firms.