Nokia Corporation NOK has leapfrogged its rivals by securing an exclusive 5G deal from Taiwan Mobile worth approximately €400 million. The three-year framework deal entails Nokia to supply essential communications equipment as the sole vendor for the mobile phone operator for its seamless transition to 5G technology.
The company will offer AirScale Radio Access products to deliver low-latency, high-capacity broadband connectivity. This industry-first commercial end-to-end 5G solution will enable Taiwan Mobile to meet higher demand for data and optimize operations with low costs of ownership. At the same time, the carrier will leverage several software solutions providing cloud and security services to augment its network capabilities.
Nokia’s 5G portfolio will provide a solid foundation to scale up Taiwan Mobile’s legacy network infrastructure within dynamic cloud environments, with a sharp focus on scalability, automation and performance. This, in turn, will enable the carrier to deliver 5G services with Unified Data Management, Signaling and improved network functions. Network Exposure function is also included for future 5G application innovation and business evolution, while NetAct Network Management will help Taiwan Mobile better operate the infrastructure.
The win-win deal will further strengthen the long-term business relationship between Nokia and Taiwan Mobile. In addition, it will facilitate the companies to work in unison to promote the “Super 5G Strategy,” which integrates multiple vertical applications to build a thriving ecosystem that is likely to create new possibilities for business enterprises in the 5G era.
Nokia is well positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. Its installed base of high-capacity AirScale products, which enable customers to quickly upgrade to 5G, is growing fast. 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 IoT.
In order to strengthen its leading position in the market, 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. The company seeks to expand 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 significantly in 2020 and beyond.
Nokia remains focused on building a robust scalable software business and expanding it to structurally attractive enterprise adjacencies. It has reached more than 66 commercial 5G contracts across the globe, with 19 live networks. The company’s end-to-end portfolio includes products and services for every part of a network, which are 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.
Nokia’s shares have lost 13.5% compared with the industry’s decline of 2.4% in the past year. Nevertheless, we remain impressed with the inherent long-term growth potential of this Zacks Rank #3 (Hold) stock.
Some better-ranked stocks in the industry are Ericsson ERIC, PCTEL, Inc. PCTI and Juniper Networks, Inc. JNPR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ericsson has a long-term earnings growth expectation of 25.9%.
PCTEL delivered a positive earnings surprise of 33.9%, on average, in the trailing four quarters.
Juniper has a long-term earnings growth expectation of 8%.
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