The vendor squeeze: how Ericsson, Nokia, Huawei and Samsung play operators off each other, MBA Training, MBA Training
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The vendor squeeze: how Ericsson, Nokia, Huawei and Samsung play operators off each other
# The vendor squeeze: how Ericsson, Nokia, Huawei and Samsung play operators off each other
In 2023, Deutsche Telekom split a major RAN (Radio Access Network, the towers and base stations that connect phones to the network) modernization contract between Ericsson and Nokia, market by market, rather than handing it to a single winner. The stated reason: never let one vendor become indispensable. The unstated reason: leverage decays fast once a network is built, and operators know it.
This lesson unpacks that dynamic. Who holds the cards in RAN supply, how operators try to keep vendors competing, and why that leverage quietly evaporates a few years into every contract.
The players: a four-way oligopoly, unevenly distributed
RAN equipment is one of the most concentrated supply markets in telecom. Four vendors account for the overwhelming majority of global deployments, per estimates from analysts like Dell'Oro Group:
Ericsson (Sweden): strong in North America and Northern Europe, deep 5G patent portfolio.
Nokia (Finland): strong in Europe and North America, rebuilding after losing share earlier in the 5G cycle.
Huawei (China): dominant in China and much of Asia, Africa, and Latin America; largely excluded from the US, UK, and several EU markets on national security grounds.
Samsung (South Korea): smaller global footprint but entrenched in South Korea and gaining share in the US, partly through open RAN deals.
This is an oligopoly (a market controlled by a small number of sellers) with a geopolitical fracture running through it. Huawei's exclusion from Western markets, driven by US restrictions and EU member state bans (formalized under the EU's
), means Western operators effectively choose from three vendors, not four. That single fact changes the entire power balance in Europe and North America.
Why operators dual-source in the first place
Telecom operators (also called carriers or CSPs, communications service providers) dual-source RAN equipment for three concrete reasons:
1. Price leverage. A credible second bidder keeps the incumbent's pricing honest at renewal time.
2. Supply resilience. A single-vendor network is a single point of failure, commercially and technically. If one vendor has a chip shortage or a software defect, a split footprint limits the blast radius.
3. Regulatory and political hedging. Governments increasingly attach conditions to vendor choice (security reviews, "trusted vendor" lists). Operators spread risk across geopolitically distinct suppliers.
Vodafone, for example, has historically run Ericsson, Nokia, and (in some markets, before restrictions) Huawei simultaneously across its European footprint, geographically segmented so each vendor manages a defined region.
How the tender game is actually played
A typical multi-vendor RAN tender looks like this:
The operator issues an RFP (Request for Proposal) covering multiple national markets or regions.
Ericsson, Nokia, and Samsung (Huawei, where eligible) submit bids covering equipment pricing, software licensing, multi-year support, and often vendor financing (the supplier helping fund the deployment, common when vendors are hungry for share).
The operator splits the award: Vendor A gets 60% of sites (say, urban/dense markets), Vendor B gets 40% (rural or a specific country).
Contracts typically run 3 to 7 years, with swap costs (ripping out one vendor's hardware for another's) making early switching expensive.
The split itself is the leverage mechanism. No vendor gets guaranteed exclusivity, and each knows the operator can shift the ratio at the next renewal. This is why Nokia's 2021 loss of AT&T share to Ericsson, and its subsequent underbidding to win back position with T-Mobile US in 2023, both made industry headlines: the swing in single contracts is large enough to move a vendor's global RAN revenue materially.
Where the leverage runs out
Here is the part operators don't advertise: dual-sourcing leverage is strongest *before* signing and weakest *after*.
Switching costs are structural, not just financial. RAN equipment isn't Lego. Radios, baseband units, and software stacks are tightly integrated. Swapping Ericsson radios for Nokia ones on a live network means re-engineering, re-testing, and re-training field teams, often over 18 to 36 months. That's why swaps (Nokia replacing Huawei at some European operators post-ban is the clearest recent example) are treated as multi-year strategic programs, not procurement line items.
Standards essential patents cut the other way. Ericsson, Nokia, and Huawei hold large 5G SEP (Standard Essential Patent) portfolios. Operators pay licensing fees regardless of which vendor's boxes they buy, and vendors' handset and infrastructure patent income is a parallel revenue stream that dilutes the impact of losing an equipment bid.
The vendor pool itself is shrinking. Fewer credible bidders per region means less real competitive tension over time. In markets where Huawei is banned, "multi-vendor" often means choosing among just Ericsson, Nokia, and (increasingly) Samsung. Three bidders is workable, but it's a much thinner market than the "four global giants" framing suggests.
Open RAN was supposed to fix this, and has only partly delivered. Open RAN (a push, backed by groups like the O-RAN Alliance, to disaggregate hardware and software so components from different vendors interoperate) was meant to let operators mix and match, breaking vendor lock-in entirely. In practice, integration complexity and performance gaps have slowed rollout. Dish Network's US Open RAN buildout and Vodafone/Rakuten trials show it's real, but it remains a minority of global RAN deployments as of 2025, per Dell'Oro estimates.
Vérification des acquis
1. Why did Deutsche Telekom split its RAN modernization contract between Ericsson and Nokia rather than choose a single vendor?
2. What does it mean that operator leverage over RAN vendors 'decays fast once a network is built'?
3. How does Huawei's exclusion from the US, UK, and parts of the EU change the competitive dynamics for Western operators specifically?
CHOIX MULTIPLES
4. Select ALL correct answers about the structure of the global RAN equipment market described in the lesson.
Sélectionnez toutes les réponses correctes.
CHOIX MULTIPLES
5. Select ALL correct answers about why operators like Deutsche Telekom try to keep multiple vendors competing for contracts.
Sélectionnez toutes les réponses correctes.
Where the margin actually sits
Value doesn't distribute evenly across this chain. A rough mapmapUsing software to automate repetitive marketing tasks and campaigns, enabling personalisation at scale across channels like email, web, and social.Voir la définition complète →:
Chip and component suppliers (Qualcomm, MediaTek, and specialized RF chipmakers) capture margin regardless of which RAN vendor wins, since all vendors buy similar underlying silicon.
RAN vendors (Ericsson, Nokia, Samsung, Huawei) operate on notoriously thin hardware margins, often citing single-digit operating margins on network infrastructure specifically, because operator buying power and multi-vendor competition compress prices hard. Ericsson and Nokia have both flagged RAN margin pressure repeatedly in investor calls through 2023 to 2025.
Software and services (network management, AI-driven optimization, managed services contracts) is where vendors are trying to rebuild margin, since it's stickier and harder for operators to commoditize than hardware boxes.
Operators capture the customer relationship and the spectrum license (the government-granted right to use radio frequencies), which is the actual scarce asset in the chain, but face heavy capexcapexCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.Voir la définition complète → (capital expenditurecapital expenditureCapital Expenditure (CapEx) is money spent to acquire, upgrade, or extend long-lived assets like equipment, property, or software that deliver value over multiple years.Voir la définition complète →) and slow revenue growth from saturated consumer markets.
The uncomfortable truth for vendors: operators have more leverage over hardware pricing than vendors have over almost anything downstream. That's a structural feature of this market, not a temporary cyclical dip.
Key Takeaways
Dual/multi-sourcing gives operators real leverage at contract signing, through split awards and credible competing bids, but that leverage weakens sharply post-deployment due to high switching costs.
The vendor pool is effectively three players in most Western markets (Ericsson, Nokia, Samsung), not four, because Huawei is excluded on national security grounds under frameworks like the EU's 5G Cybersecurity Toolbox and US restrictions.
Standard Essential Patents and integration complexity blunt the threat of switching, meaning vendors retain pricing power even when they lose a specific tender.
Open RAN promises to restore operator leverage by disaggregating hardware and software, but adoption remains partial as of the mid-2020s.
Margin sits unevenly across the chain: chipmakers and operators (via spectrum) hold structural advantages, while RAN vendors compete on thin hardware margins and are pushing into software and services to compensate.