Videocon to Tap NSN for LTE

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Nokia-Siemens Network (‘NSN’), a 50-50 joint venture between Nokia Corporation (NOK) and Siemens AG (SI) is on the verge of winning yet another LTE (Long Term Evolution) contract. As per media reports the telecommunication arm of Videocon Industries Limited intents to provide the contract for LTE network roll out in India to NSN.

This could be a second LTE contract for NSN within a couple of weeks after Telefonica SA (TEF) chose NSN to deploy LTE Network for its Chilean subsidiary.

The proposed 4G network is expected to be built on the TD (Time Division)-LTE technology, which is the 4G standard followed in India. TD-LTE technology can transfer data five times faster than 3G networks and will allow consumers to download HD video and games at a much faster pace.

If successful this will be the second network contract for NSN from the telecommunication company as Nokia-Siemens Network already manages Videocon’s 2G network in India. Notably, Videocon was one of the five companies that won 4G airwaves in the 2010 auction and has won licenses in 6 of the 22 telecom circles in India.

Bharti Airtel Limited has already launched 4G LT service in three different cities and is leading the 4G race in India while Reliance Industries Limited is the only carrier, which has won pan India Broadband Wireless Access (BWA) spectrum. Reliance is planning to launch 4G networks in 40 different cities across India with an investment of around $10 billion.

Smartphone has taken the center stage of the telecom market in the last couple of years as people tend to use it more as a data sharing device rather than for the usual voice services. Higher proliferation of smartphones has induced customers to download more content via these superfast gadgets.

However, to support the data transfer demand telecom carriers around the world are ramping up their network from 3G to superfast LTE services and India is no exception. Most of the operators who have short listed their preferred vendor are on the verge of launching their options in different telecom circles.

Although NSN has failed to grab the Tikona Digital Networks LTE contract and has lost out to Ericsson (ERIC) and ZTE Corp, it has procured the prestigious Bharti Airtel LTE contract for the Maharashtra circle. We believe this contract win will consolidate its position in the Indian LTE market, which of late has been dominated by the Chinese vendors who have won network infrastructure contracts by providing lower bids.

Currently, Nokia carries a Zacks Rank #2 (Buy).

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