Nokia-Siemens Networks (NSN), a 50-50 joint venture between Nokia Corporation ( NOK ) and Siemens AG ( SI ), has won a network expansion contract from Korek telecom in southern Iraq. This is the second Middle East contract for NSN, which followed the recently won $325 million LTE contract in Saudi Arabia.
Per the agreement, NSN will supply Korek Telecom with its Core and Radio Access Network (RAN) product along with providing care and managed services. However, the amount and the period of the contract were not disclosed.
Notably, Korek Telecom is the fastest growing mobile carrier in Europe and offers mobile data via GPRS and EDGE technology. As part of the radio contract, NSN will provide its "Flexi Direct" product, which reduces delay in data transmission, enhancing Internet speed and voice calls.
Additionally, Korek Telecom is planning to rollout HSPA (High Speed Packet Access) network, based on 3G technology. Thus, the company is deploying NSN's energy efficient "Flexi Multi radio Base Stations", which supports 2G, 3G and LTE network. As part of its Core Network, the equipment vendor will supply EPC (Evolved Packet Core) platform that includes service-aware charging function and a security solution. These unique facilities will allow Korek to get steady access to various data plans and also protect its data content.
In the recently concluded 2Q13, Nokia Siemens reported mixed financial results. While the revenues declined 16.8% on an annualized basis, the company's adjusted operating profit surged an enormous 1,072% year over year. It seems that the restructuring effort is yielding improved results for the company.
We believe that the contract will strengthen NSN's presence in the Middle East and Africa region, where the company serves a population of 1.2 billion. NSN serves some of the big telecom companies like Vodafone Group Plc. ( VOD ), Etisalat Vodacom. The deal will be a major win over rival Ericsson ( ERIC ), which has been an early entrant in the war prone country.
Recently, Nokia agreed to acquire the remaining stake of Siemens AG for nearly $2.15 billion. Both Nokia and Siemens expect to complete the deal in the third quarter of 2013, subject to customary regulatory approvals.
Nokia currently carries a Zacks Rank #3 (Hold).