Nokia Siemens Networks ("NSN"), a leading equipment,
infrastructure and service provider for telecom networks
globally, is focused on gaining the second spot in the lucrative
U.S. market. Formed in 2007 as a 50-50 joint venture between
), NSN currently is the third largest global telecom equipment
gear maker. Interestingly, the existing agreement between Nokia
and Siemens for NSN will come to an end in 2013.
Espoo, Finland based NSN is betting on the recent merger talks
between Sprint-Softbank and T-mobile USA - MetroPCS as an
opportunity to grab new business for the company. However, both
the deals are yet to get the FCC (Federal Communications
According to NSN, if Softbank manages to get hold of Sprint,
it could work in favor of the gear manufacturer because of its
strong supplier relationship with Softbank. Additionally being a
prime network gear vendor for T-Mobile USA, its potential merger
with MetroPCS could open up significant opportunity for NSN.
Historically NSN has not achieved much success in the U.S.
market as it was way behind in the CDMA (Code Division Multiple
Access) based technology - the most dominant network protocol
used in the North American market. Moreover, by offering lower
bids for network infrastructure contracts, the Chinese vendors
like ZTE and Huawei Technologies provided stiff competition to
In an attempt to overcome this difficult situation and to
concentrate on its mobile broadband business, the company is
reducing its operating cost by retrenching employees and selling
its non-core business units. NSN plans to lay off 17,000 or 23%
of its work force and expects the restructuring to result in an
annual cost reduction of approximately $1.35 billion by 2013.
The restructuring measure yielded positive results for NSN as
the company declared its first operational profitability in the
third quarter of 2012. Sales in North America also rose 20% last
year, thereby increasing the pressure on second biggest equipment
We believe that apart from the mergers there are other
positives for NSN in the U.S. market. Notably, large scale
deployment of 4G LTE network in the U.S. provides significant
opportunity for NSN. Telecom carriers are heavily investing in
network upgrade to support massive demand for mobile data and
video. Additionally, the Chinese companies are facing
political hindrances in the U.S. market over security concerns.
NSN only came second to industry leader
) in gaining LTE revenue in the fourth quarter and has won
contracts worth $451.40 million. Though the company still needs
to go some way before catching up Ericsson, the above mentioned
positives could help the company to capture the all important
second slot in the U.S. market.
Currently, Nokia carries a Zacks rank# 2 (Buy).
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