Nokia-Siemens Networks (‘NSN’) – a 50-50 joint venture between Nokia Corporation (NOK) and Siemens AG (SI) – has recently struck a $325 million deal with Mobily, a leading carrier in Saudi Arab.
Per the deal, Nokia Siemens Networks will assist Mobily to deploy 4GLTE network across its footprint in 18 months. Mobility will make payments to Nokia Siemens by using the credit facility available with Finnvera, Finnish Export Credit (:FEC), and financing companies like Credit Agricole and Deutsche Bank.
Higher adoption of smartphones and tablets has increased the demand for data usage in Saudi Arab. Hence, to ease the pressure, major telecom operators are continuously upgrading their networks from 3G to ultra-fast 4GLTE technology.
NSN’s 4GLTE equipments were widely used by most carriers around the world and remain hugely popular after Ericsson (ERIC) and Huawei. In the recently concluded first-quarter 2013, NSN generated $3.65 billion of revenues. While the Middle East & Africa region contributed 9.2%, the Asia-Pacific region was the highest contributor with $1.14 billion. Thus, we believe that wining such major contracts across these regions will certainly bolster the company’s revenues.
Moreover, world’s largest telecom operator, China Mobile Limited (CHL), is targeting to deploy nearly 200,000 TD-LTE base stations by the end of 2013. This will further boost NSN’s 4GLTE equipment business.
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).
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