Increased usage of smartphones and tablets coupled with higher downloads of HD movies have stimulated demand for data usage and faster network speed. Consequently, to suffice the need of the data hungry customers, the telecom companies are continuously upgrading their network services from 2G to 3G and now to advanced 4GLTE technology, which is at present offering a maximum data downloading speed of 1Gbps. Therefore, as per Nokia Siemens, attaining such record speed of 1.6 Gbps will enable customers to download an HD movie in less than 24 seconds.
Nokia’s Nokia-Siemens Networks segment offers wireless and fixed network infrastructure and networks service platforms in addition to professional services to telecom operators and service providers. It develops GSM, EDGE, and 3G/WCDMA/HSPA radio access networks and cellular transmission network solutions for mobile and fixed network operators.
In the recently concluded quarter, Nokia-Siemens Networks segment generated revenue of $4,295 million, down 8% year over year. However, we believe that the business scenario for Nokia-Siemens is expected to change in the years to come as more telecom operators start deploying TD-LTE technology in their respective footprints. Moreover, huge availability of 4GLTE-based smartphones coupled with the launch of Aple Inc’.s (AAPL) first 4GLTE-based iPhone 5 will further put pressure on telecom carriers to speed up their TD-LTE commercial launch date.
Furthermore, the world’s largest telecom operator China Mobile Limited (CHL), which covers nearly 75% of Chinese market, also plans to rollout TD-LTE technology in the upcoming months and will be using Nokia-Siemens technology, which we believe will act as a huge catalyst for growth going forward.
According to the latest report provided by the Global mobile Suppliers Association (:GSA), out of the total 11 TD-LTE commercially deployed by the telecom carriers, 5 are using Nokia-Siemens Networks’ equipments.
Taking all these factors into consideration we believe that Nokia’s this particular segment will register impressive results in the upcoming quarters.
We retain our long-term Neutral recommendation on Nokia Corp. Currently, it has a Zacks #3 Rank, implying a short-term Hold rating.
More From Zacks.com