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Nokia Arm, Algerie Telecom Ink LTE Pact

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Nokia Corporation’s (NOK) network unit, Nokia Solutions and Networks (“NSN”), has recently cut a deal with Algerian-based carrier Algérie Télécom.

Per the deal, NSN will deliver its popular RAN (radio access network) technology on its Flexi Multiradio 10 Base Station to network sites. Moreover, the company will initiate the deployment of its cloud-based NetAct technology, which will further boost network efficiency. Nokia’s security solution helps maintain end users' privacy along with guarding the carrier’s network assets. However, the financial terms of the contract have been kept under wraps.

A few months back, NSN won a major contract in Russia. VimpelCom Ltd. (VIP), the third largest telecom operator in Russia, selected NSN for the supply of equipment and services for its 4G LTE (long-term evolution) network deployment. Aggressive 4G LTE network rollout across China coupled with higher capital spending on network upgrades in India, Korea and Indonesia should drive the company’s top line going forward.

NSN has also received a major 4G LTE network upgrade contract valued nearly $416 million from EE, a leading U.K.-based wireless operator. The contract entails NSN to implement its Single RAN Advanced solutions to allow mobile operators to set up different network standards (radio technologies) on a shared multi-purpose hardware.

Popularity wise, NSN’s 4G LTE equipment is positioned after Ericsson (ERIC) and Huawei. In the recently concluded first quarter of 2014, the NSN segment generated $3.2 billion in revenues, down 17% year over year. However, we believe that continuous contract wins will help the company make a turnaround in its financials going ahead.

In a separate development, Nokia completed the sale of its core mobile handset and services division to Microsoft Corp. (MSFT) last month. Post the divestiture, NSN has become the company’s chief business division and accounts for approximately 90% of the total revenue.

Nokia currently sports a Zacks Rank #3 (Hold).

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