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Nokia Unit, Cellcom in LTE Pact

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Nokia Corporation’s (NOK - Free Report) wholly-owned subsidiary Nokia Solutions and Networks (“NSN”) has recently cut a deal with one of Israel’s leading telecom operators, Cellcom.

Per the deal, NSN will supply 4GLTE equipment to Cellcom which will also support the LTE advanced network technology. However, the financial terms of the contract have not been disclosed.

Cellcom plans to complete the deployment of 4GLTE network technology across its entire footprint by the end of 2014. However, this endeavor is subject to regulatory approvals and availability of frequency. Earlier, Cellcom had teamed up with rival carrier Pelephone on LTE network partnership, which has also been delayed due to regulatory issues. This is a matter of concern for NSN as delays in 4GLTE rollout may mar the company’s business prospects in Israel.

A few months back, NSN won a major contract in Russia. VimpelCom Ltd. , the third largest telecom operator in Russia, selected NSN to provide equipment and services for its 4G LTE (Long-Term Evolution) network deployment plans. Moreover, aggressive 4GLTE network rollout across China coupled with higher capital spending on network upgrades in India, Korea and Indonesia may drive the company’s top line going forward.

NSN has also received a major 4G LTE network upgrade contract of nearly $416 million from EE, a leading U.K.-based wireless operator. The contract entails NSN to implement its Single radio access network (RAN) Advanced solutions to allow mobile operators to set up different network standards (radio technologies) on a shared multi-purpose hardware.

NSN’s 4GLTE equipment is widely used by carriers and popularity wise, are positioned after Ericsson (ERIC - Free Report) and Huawei. In the recently concluded fourth-quarter 2013, the NSN segment generated $4.2 billion in revenues, up 20% sequentially. Hence, we believe that such continuous contract wins will help the company boost its top line in the forthcoming quarters.

Notably, Nokia decided to vend its core mobile handset and services division to Microsoft Corp. (MSFT - Free Report) . The deal is expected to close within a couple of months. Post the divestiture, NSN will become the company’s chief business division with approximately 90% of the total revenue.

Nokia currently carries a Zacks Rank #1 (Strong Buy).

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