Nokia Gaining Traction In India With Key Network Deals

Nokia ( NOK ) seems to be doing well with its leaner and reinvented business structure, especially when it comes to expanding its networks business in the Asia-Pacific region. The telecom equipment maker won 12 important deals in India in the first half of the year, involving the modernization of 2G and 3G networks, 4G deployment, WiFi solutions, security solutions and device management. With this, Nokia now leads the country's 4G LTE market in terms of contract wins.

The deals include a five-year contract with wireless major Vodafone for the modernization of its radio access network (RAN) equipment and a three-year network upgrade deal with India's third largest carrier Idea Cellular. Following the recent deals, Nokia is now working with Vodafone in 19 out of the 22 telecom circles in India, and has also become the biggest equipment provider to Idea Cellular in the country. The company has also partnered with other key telecom players such as market leader Airtel, state-owned operators MTNL and BSNL, Uninor, Videocon (for FDD-LTE 4G deployment in six circles), Tata Tele and the Indian railways. Although the Indian 4G market is still in its nascent stages, early contract wins could help the company understand the market better than rivals and gain a competitive edge for future contracts.

Following the sale of its handset business to Microsoft, Networks is the largest business division for Nokia, contributing about 90% of the company's sales and about 50% of the company's value, according to our estimates. In this division, it is worth noting that Asia-Pacific was one of the only two regions (the other being Greater China, which is reported separately) that reported year-over-year sales growth last quarter, helping the company reverse much of its top-line losses from other geographies, especially Europe. Apart from India, the company has done well in gaining contracts in other regions as well, such as Europe, China and Africa. Going forward, we expect the company's Networks sales to improve as the recent contract wins start bringing in revenues.

We have a price estimate of about $8 for Nokia , which is slightly ahead of the current market price.

See our complete analysis for Nokia stock here

Other Recent Network Deals

At the start of the year, Nokia inked a major deal with Russia's third largest telecom operator, VimpelCom Ltd., to provide network equipment and services for expanding its 4G network in central and southern Russia, most of the Ural and Volga regions as well as Siberia. The company also renewed its contract with Chunghwa Telecom in December of last year, to help in its capacity expansion. Chunghwa Telecom, Taiwan's largest telecom player, is looking to launch 4G services very soon and has selected Nokia's Network division (formerly NSN) as its primary equipment supplier.

In more recent developments, Nokia bagged a five-year deal from Telenor in May to provide radio access network (RAN) equipment and services to expand its 2G, 3G and 4G network across Europe and Asia. The company also recently signed a deal with Algeria-based Algérie Télécom, to deploy North Africa's first commercial LTE network.

In China, Nokia has done well in winning LTE contracts with China Mobile ( CHL ) and China Telecom ( CHA ), and is on track to become the leading foreign player in the Chinese LTE buildout. In Europe, NSN won two large LTE contracts with Everything Everywhere and Vodafone, which should help stabilize revenues in the second half of the year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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