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Nokia (NOK) Extends Supply Contract With Indosat in Indonesia

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Nokia Corporation (NOK - Free Report) recently inked a multi-year deal with Indosat Ooredoo to expand the carrier’s 5G services in Surabaya, a port city in Indonesia. The three-year comprehensive deal will enable Nokia to supply essential telecommunication equipment as the principal vendor will help Indosat offer commercial 5G services across the region.

Per the deal, Nokia will provide 5G RAN solutions from its leading AirScale portfolio for extensive indoor and outdoor coverage spanning 1.4 million square kilometers, including Sumatra island, Kalimantan island, Central Java and Surabaya city. The AirScale Radio Access products deliver low-latency, high-capacity mobile connectivity with a low cost of ownership and can be easily upgraded through a software update, thereby reducing network complexity. Nokia will also offer dynamic spectrum sharing (DSS) technology to Indosat that synchronizes the spectrum usage between 4G and 5G, and helps network operators to reuse lower-frequency 4G radio networks for 5G deployment. The DSS strategy enables the rollout of both 4G and 5G in the same band and proactively allocates spectrum resources between them based on user demand.

By unlocking network efficiencies with common operability, software delivery and increased hardware sharing, Nokia has reduced the total cost of ownership for mobile operators like Indosat. The company is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. Its installed base of high-capacity AirScale product is growing fast. Deploying its industry-leading software, 5G RAN and IP-Backhaul solutions for this project, Nokia will help develop a reference design and build use cases on standards-based solutions. This, in turn, will likely help it tap the enormous potential of 5G to drive innovation in Indonesia, with the rollout likely commencing this month.  

The company is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and Internet of Things.

The company facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation to support dynamic operations, reduce complexity and improve efficiency. Nokia remains focused on building a robust scalable software business and expanding it to structurally attractive enterprise adjacencies. It has inked more than 214 commercial 5G contracts across the globe. The company’s end-to-end portfolio includes products and services for every part of a network, helping operators enable key 5G capabilities, such as network slicing, distributed cloud and industrial IoT. Accelerated strategy execution, sharpened customer focus and reduced long-term costs are expected to position the company as a global leader in the delivery of end-to-end 5G solutions.

The stock has gained 27.8% in the past year compared with the industry’s rally of 11.9%. We remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock.

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A better-ranked stock in the industry is Clearfield, Inc. (CLFD - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered an earnings surprise of 50.7%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 112.2% since March 2021. Over the past year, Clearfield has gained a solid 84.9%.

Sierra Wireless, Inc. (SWIR - Free Report) carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 12.5% and delivered an earnings surprise of 58%, on average, in the trailing four quarters.

Over the past year, Sierra Wireless has gained 18.4%. Earnings estimates for the current year for the stock have moved up 68.8% since March 2021. The company continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.

Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2, is another key pick. It has a long-term earnings growth expectation of 16.1% and delivered an earnings surprise of 12.2%, on average, in the trailing four quarters.

Earnings estimates for the current fiscal for the stock have moved up 43.2% over the past year, while that for the next fiscal is up 48.6%. Qualcomm is likely to benefit in the long run from solid 5G traction and a surge in demand for essential products that are the building blocks of digital transformation in the cloud economy.

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