Orange to Test Cloud-Based 5G Network, Taps Dell as Partner

French telecom company Orange (ORAN) plans to launch Europe’s first fully cloud-based 5G network test this month. It intends to carry out the test in Lannion, France.

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The operator is moving toward what it describes as a “zero touch network” and says the pilot will be a blue-print for the next generation of networks that are more efficient and agile. The test network will be fully automated, 100% software-enabled, and data and artificial intelligence-driven.

Orange plans to run the cloud-based 5G network test for the next two years. It will use the test to better understand the full potential of data and AI. The operator will also seek to understand the benefits of a cloud-based network to the customer experience. Additionally, the experiment will enable Orange to understand the future skills required.

“Our ambition is to prepare Orange for the operator of the future by building more resilient and auto-adaptive networks that offer best in class quality of service in each situation,” said Orange’s Chief Technology and Innovation Officer, Michaël Trabbia.

Orange has assembled multiple partners to help it run the network test. Dell Technologies (DELL) will provide infrastructure and servers, Hewlett Packard Enterprise (HPE) will provide Cloud 5G standalone SDM (Subscriber Data Management), and Xiaomi will offer devices. The experiment is expected to expand to more locations in 2022 and reach more users. (See Orange stock chart on TipRanks).

Barclays analyst Mathieu Robilliard recently downgraded Orange to a Sell from a Hold with a price target of $11.31. Robilliard’s price target suggests 1.17% downside potential.

The analyst noted that Orange’s intention to protect market share would hurt pricing and may not accelerate volume growth. As a result, Robilliard predicts a decline in Orange’s France revenue and EBITDA for the coming three to five years.

Consensus among analysts is a Hold based on 1 Buy, 3 Holds, and 1 Sell. The average Orange price target of $14.52 implies 26.92% upside potential to current levels.

ORAN scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.