Verizon Nabs Microsoft, Nokia For Private 5G Networks

Verizon has teamed up with Microsoft Corp. and Nokia to help its business clients globally to build faster and more secure applications through private 5G networks.

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As part of the Microsoft collaboration, Verizon (VZ) will integrate the tech giant’s cloud software Azure into its on-site 5G edge network for ultra-low latency that promises to be “many times faster than the blink of an eye”, and can help businesses tap into real-time data analysis and delivery. On-site private 5G networks enable businesses to boost power efficiencies and cut costs of end user devices, while helping to address their privacy and security needs.

In addition, Verizon will utilize Nokia’s Digital Automation Cloud, a private wireless network solution that will allow businesses in Europe and the Asia-Pacific region to deploy applications through a web-based interface.

A private 5G network is a self-contained network whose components all reside in a single facility, consisting of micro towers and small cells and connects to an organization’s Local Area Network (LAN) and enterprise applications. Verizon is targeting clients with manufacturing, distribution and logistics facilities, who need to deploy a customized on-site mobile network, and with the private 5G network won’t need to transmit data through public networks.

“If the past few months have taught us anything, it’s that there’s never been a more critical time for mobility, broadband and cloud products and services,” said Verizon Business CEO Tami Erwin. “Private 5G networks will be a transformative technology that will drive the new era of disruption and innovation for enterprises around the world.”

Verizon disclosed that logistics and supply chain solutions company Ice Mobility is the first client already testing its on-site 5G Edge platform, integrated with Microsoft (MSFT) Azure. By gathering data in near real-time on product packing errors, the company has the potential to improve on-site quality assurance and save 15% to 30% in processing time, Verizon said.

The telecom operator said that it is planning to explore more opportunities with Microsoft to offer solutions to industries ranging from manufacturing to healthcare.

Shares in VZ are trading down 6.6% year-to-date, and the stock scores a cautiously optimistic Moderate Buy Street consensus. That’s with analysts evenly split between 6 Hold ratings and 6 Buy ratings. Their $62.91 average price target indicates almost 10% upside potential lies ahead over the coming year.

Argus Research analyst Joseph Bonner last month upgraded Verizon to Buy from Hold with a $68 price target as the analyst is positive on the company’s “strategically critical move” in recently winning a key spectrum block in the Federal Communications Commission’s (FCC) auction along with its dividend increases.

Bonner also believes that most consumers are bound to stay with their current carriers for the time being, which he views as a positive for Verizon as the “wireless industry’s leading incumbent.” (See Verizon stock analysis on TipRanks).