Nokia Corporation’s (NOK) network unit, Nokia Solutions and Networks (“NSN”), has recently sealed a five-year deal with Telenor – a multinational telecommunications company – to provide the latter with radio access equipment and accomplished services. The financial terms of the contract have, however, been kept under wraps.
Per the deal, NSN will help Telenor in upgrading its 2G, 3G and 4G networks across Europe and Asia. Nokia’s security solution helps maintain end users' privacy besides guarding the carrier’s network assets. More recently, NSN inked a deal with Algerian-based carrier Algérie Télécom. Per the agreement, NSN will deliver its popular RAN (radio access network) technology on its Flexi Multiradio 10 Base Station to network sites.
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 Nokia’s top line going forward.
Nokia’s NSN segment generated $3.2 billion in revenues, down 17% year over year. However, we believe that continuous contract wins can help the company make a turnaround in its financials going ahead. Nokia recently received a shot on its arm when Moody’s Investor Service upgraded the credit rating of the company. The rating agency upgraded Nokia’s corporate family rating to Ba2 from B1.
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 has a Zacks Rank #3 (Hold). A well-placed stock worth considering in the wireless equipment industry is Polycom, Inc. (PLCM) with a Zacks Rank #1 (Strong Buy).