The Zhitong Finance App learned that UBS downgraded the Ericsson (ERIC.US) rating from “neutral” to “sell” and lowered the target price of the stock from SEK 54 to SEK 51 due to medium- to long-term concerns about OpenRAN.

UBS analysts said, “2024 will remain challenging — we expect India's spending to stabilize in 2024 after a significant year of investment, and Europe will also lack growth, mainly due to macroeconomic uncertainty. Overall, we expect telecom capital expenditure to drop 4% year over year in 2024.”

They also believe that despite OpenRAN's problems, the market is pricing Network's EV/sales by more than 1x, while Nokia Network's pricing is negative.

By making it easier for operators to mix and match radio vendors within a given region, and allowing the use of off-the-shelf radio software hardware, OpenRAN could lower barriers to entry and pose a threat in terms of pricing and market share.

The analyst added, “As AT&T announces plans to take the lead in deploying OpenRAN in the US and plans to cross 70% of its wireless network traffic across open platforms by the end of 2026, we believe the impact of the OpenRAN outage will begin to be felt and will have a negative impact on Ericsson and wireless telecom equipment in the medium term.”