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Nokia-Tencent Partnership to Benefit Internet Users in China

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Nokia Corporation (NOK - Free Report) recently inked an agreement with Tencent to carry out joint research and development work in 5G to benefit the Internet users of China. The strategic framework aims to pool in resources of both the companies for the overall improvement of the industry and is likely to be a win-win deal.

Tencent, a leading Internet service provider in China, reportedly has more than 1 billion combined monthly active users in its WeChat and QQ social media applications. By collaborating with Nokia, Tencent seeks to establish an end-to-end 5G test environment in Shenzhen for faster data connectivity and download speed for various mobile video contents in order to benefit a steadily growing customer base.

The companies will jointly develop a laboratory to explore the feasibility of newer applications and leverage the artificial intelligence and automation management capabilities enabled by 5G to promote international standards and an open-source ecosystem. This would help both the companies to successfully address the booming market of the digital economy.

Both Nokia and Tencent will jointly conduct thorough research and simulation tests utilizing state-of-the-art technology like Edge Computing for the overall improvement of several vertical markets such as transportation, finance, energy, intelligent manufacturing and entertainment. This, in turn, is likely to lead to widespread adoption of applications such as Cellular Vehicle-to-Everything (C-V2X), which is expected to be instrumental in transforming connected transportation services throughout the globe. In addition, the joint venture is likely to augment the delivery of services like cloud-based gaming and entertainment that are expected to be the next big drivers in the Internet of Things space.

Nokia is a leading player in the mobile and fixed network infrastructure with the industry’s most complete, end-to-end portfolio of products, services and licensing. 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, Internet of Things, as well as security platforms, data analytics, and sensors.

With a diligent execution of operational plans, Nokia has gained 17.4% in the past six months against a decline of 2.7% for the industry. Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and 2020. Nokia’s Networks division is also expected to grow faster than the primary addressable market over the long term.

Nokia currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Comtech Telecommunications Corp. (CMTL - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Motorola Solutions, Inc. (MSI - Free Report) and Ubiquiti Networks, Inc. (UBNT - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Comtech Telecommunications has a long-term earnings growth expectation of 5%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 123.7%.

Motorola has a long-term earnings growth expectation of 8%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 12.1%.

Ubiquiti Networks has a long-term earnings growth expectation of 18.6%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 8.9%.

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