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Analyst Blog

Nokia Corporation’s (NOK - Analyst Report) wholly-owned subsidiary, Nokia Solutions and Networks (“NSN”), has extended its deal with Saudi Telecom Company (STC) to offer managed services to GSM, 3G and LTE networks. However, the financial terms of the contract have not been disclosed.

Earlier, NSN aided the deployment of 4GLTE technology by STC across Saudi Arabia’s western province. NSN supplied its popular RAN (radio access network) superior technology supported with Flexi Multiradio 10 Base Station. Moreover, it also offered TD-LTE network and USB data dongle devices to end users in order to boost TD-LTE rollout.

NSN is gaining a strong foothold in Saudi Arabian markets by continuously winning substantial orders. Last year, it struck a $325 million deal with Mobily to deploy 4GLTE network across its footprint within 18 months.

In the recently concluded fourth-quarter 2013, the NSN segment generated $4.2 billion of revenues, up 20% sequentially. Both Middle East & Africa and China contributed nearly 25% of the total revenue for NSN.

Chunghwa Telecom Co. Ltd. (CHT - Analyst Report) intends to offer LTE services from mid-2014 and has selected NSN as its major vendor while the world’s largest telecom operator, China Mobile Ltd. (CHL - Snapshot Report), is aggressively deploying TD-LTE base stations across its footprints.

Moreover, the latest report from ABI Research projects that within next five years nearly 50% of all African nations will come under LTE network coverage. Hence, we believe that such growth opportunities across China and Middle East & African regions will bolster NSN’s revenues going forward.

Nokia has decided to divest its core mobile handset business and services division to Microsoft Corp. (MSFT - Analyst Report). The deal is expected to close in the first quarter of 2014. Post the divestiture, NSN will become the company’s chief business unit.

Nokia currently carries a Zacks Rank #2 (Buy).