NSN, MTS Partnership to Continue

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Nokia-Siemens Network (“NSN”) – a 50-50 joint venture between Nokia Corporation (NOK) and Siemens AG (SI) – has decided to extend its partnership with Mobile TeleSystems (MTS) – a leading telecom operator in Russia. The partnership will deploy TD-LTE technology across Moscow and Central Russia in the third quarter of 2013.

As per the three-year contract, NSN will supply FDD LTE radio access, IP core network equipment and services to MTS’ 2,600 MHz and 800 MHz frequency band. Moreover, NSN will install its NetAct network management system for better configuration, monitoring and optimal network utilization. The Russian carrier will pay $200 million to Nokia-Siemens for the extended period.

Higher adoption of smartphones and tablets has resulted in huge network congestion. So, to improve network speed, these carriers are continuously upgrading their network capacity by deploying 4GLTE technology.

NSN’s 4GLTE equipment are widely used by most carriers worldwide are hugely popular after Ericsson (ERIC) and Huawei. In the recently concluded first-quarter 2013, NSN generated $3.6 billion of revenues. Europe was the second highest contributor with $990 million of revenues after the Asia-Pacific region. Thus, we believe that wining such major contracts in Russia will certainly bolster the company’s top line.

Moreover, the world’s largest telecom operator, China Mobile Ltd (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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