Ericsson has announced a next-generation strategic partnership with Cisco to create the networks of the future. The companies will together provide end-to-end leadership across network architectures for 5G, cloud and IP, and the Internet of Things, with the partnership combining routing, data centre, networking, cloud, mobility, management and control, and global services capabilities.
Ericsson CEO Hans Vestberg said the deal will strengthen the company’s IP strategy, extend its addressable market and especially, will will generate an estimated USD 1 billion or more of additional sales by full year 2018, for each company.
The full effect of synergies is expected to be felt in full year 2018, reached SEK 1 billion, mainly in expenses. The company said the additional sales are expected to add to operating profit already from next year. The extended addressable market is primarily in professional services, software and resell of Cisco products.
The agreement is supported by a number of agreements including a global service partner agreement, as well as a broad reseller agreement. The parties have also agreed to discuss FRAND policies and enter a licensing agreement for their respective patent portfolios. As part of this agreement, Ericsson will receive license fees from Cisco. Teams from both organizations will also begin working on a joint initiative focused on SDN/NFV and network management and control. The companies said they will continue to explore further joint business opportunities as the partnership progresses.
Ericsson and Cisco hold a combined 56,000+ patents, USD 11 billion of research and development investment, and more than 76,000 services professionals serving customers across more than 180 countries.
Centerview Partners advised on the strategic partnership. No financial details were provided.
