Nokia Siemens network a 50-50 joint venture between
) has tied up with Singapore-based original equipment manufacturer
Flextronics International Ltd.
) to open a plant that will build next generation mobile phone
network for the Latin American market.
Brazil issued 4G broadcast licenses in June, 2012, along with
the clause that 60% of the hardware has to be procured from Brazil
alone. The upcoming plant, which is expected to start selling
wireless equipment from October this year will cater to the 4G
wireless equipment demand from the Brazilian operators and will
considerably reduce the company's transport costs.
Recently, Nokia declared its second-quarter 2012 financial
results. The company's net revenue of $9,689 million exceeded the
Zacks Consensus Estimate of $9,333 million and adjusted EPS of a
loss of 10 cents bettered the Zacks Consensus Estimate of a loss of
11 cents. However, based on stiff pricing competition from Sweden's
) the network arm of the company posted revenue of $4,925 million,
down 8% year over year.
Notably, Brazil is hosting the Confederations Cup in 2013 and
the FIFA World Cup in 2014. It is expected that there will be an
additional surge in voice and data demand from football fans all
around the world. In an effort to support this huge demand,
operators have already committed $1.5 billion in capital
expenditure for the next year with 30% of it committed toward 4G
We believe this strategic move will boost the company's small
cell business, which is an upcoming technology to support wireless
data transmission and also helps the operators to expand its
wireless broadband network in a cost effective way.
Moreover, Nokia Siemens has already won contracts from a
Brazilian and a Chilean carrier, and with network spending ramping
up in Brazil it will be an opportunity for the company to increase
its Latin American market share.
The current Zacks Consensus Estimate for Nokia Corporation is
pegged at a loss of 12 cents for the third quarter with a growth
rate estimate of (393.06%). For 2012, the Zacks Consensus Estimate
stands at a loss of 38 cents with a growth rate of (199.54%) but
for 2013, the Zacks Consensus Estimate stands at a loss of 1 cent
with a growth rate of 96.55%.
We retain our long-term Neutral recommendation on Nokia Corp.
Currently, it has a Zacks #3 Rank, implying a short-term Hold
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