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Nokia's eSOC Chosen by Telefonica to Transform U.K. Unit

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Nokia Corporation (NOK - Free Report) recently announced that it has been chosen by the Spanish multinational telco, Telefónica, S.A. (TEF - Free Report) , as Service Operation Center provider to transform its subsidiary Telefónica UK’s customer-oriented business approach.

Per the agreement, the Finnish wireless equipment maker will help Telefónica UK to steadily move from a traditional network-centric operator to a customer-centric one with extensive focus on subscriber experience across the United Kingdom.

Reportedly, Nokia’s evolved Service Operation Center (eSOC) platform will be put into action for Telefónica UK's 32 million customers. This will enable the operator to dedicatedly monitor as well as augment individual customer experiences and service assurance in real time. The strategic move will also help Telefónica in transforming from a network to service provider, and distinguish itself within a highly-competitive and mature telecom market like the United Kingdom.

Notably, the Nokia eSOC platform offers the flexibility to interface with existing Telefónica UK systems and data sources, while creating an environment that allows the latter to monitor its customer experience and take required actions into cognizance. The solution includes a range of automation techniques leveraging its prowess in artificial intelligence and machine learning, allowing customers to best meet their organizational goals.

What Works for Nokia

Nokia boasts a leading position in mobile and fixed network infrastructure with the industry’s most complete, end-to-end product portfolio and is well-positioned for the upcoming technology cycle. The company’s deal win rate is encouraging with notable successes in the key 5G markets of the United States and China.

Nokia is continuously expanding its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets. Rollouts of next-generation 5G networks are expected to improve market conditions considerably in 2019 and beyond.

Further, in order to strengthen its market position, Nokia 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 needed to support dynamic operations, reduce complexity and improve efficiency.

Nokia also stated that it has expanded the patent license agreement with Samsung, which was to expire at the end of 2018. Samsung will make payments to Nokia for a multi-year period beginning Jan 1, 2019. The move exhibits the strength of Nokia’s patent portfolio, and its leadership in R&D and licensing for cellular standards, including 5G.

Nokia announced plans to accelerate strategy execution, sharpen customer focus and reduce long-term costs. This should help the company position itself for long-term 5G leadership and reaffirm commitment to full-year 2020 non-IFRS operating margin between 12% and 16% and earnings per share in the range of €0.37-€0.42.

Price Performance

Courtesy of such expanding technological collaborations with industry front-runners, Nokia’s shares have rallied 22.9% in the past year on an average against the industry’s decline of 8.4%.

Nokia currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include Comtech Telecommunications Corp. (CMTL - Free Report) and Ericsson (ERIC - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.          

Comtech has a long-term earnings growth expectation of 5%.

Ericsson currently has a forward P/E (F1) of 20.6x.

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