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Nokia NSN a Step Closer to VOD Deal

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Nokia Corporation’s (NOK) wholly owned subsidiary – Nokia Solutions and Networks (“NSN”) – will likely win a $200 million order from Vodafone Group Plc.’s (VOD) Indian division.

Per the deal, NSN will be upgrading Vodafone’s GSM and 3G networks in 19 and 6 circles, respectively.

Higher adoption of smartphones and tablets has resulted in huge network congestion. Thus, to improve network speed, most carriers are continuously upgrading their network capacity by deploying 4GLTE technology in developed nations and 3G networks in emerging countries like India.

Last month, Mobile TeleSystems (MTS) also struck a $200 million deal with NSN to for instruments required to deploy 4GLTE technology across Moscow and Central Russia. Apart from core network supports, NSN will be supplying its Single RAN (radio access network) technology to upgrade a large area of the existing sites.

Moreover, the world’s largest telecom operator, China Mobile Limited (CHL) aims to rollout nearly 200,000 TD-LTE base stations by 2013-end. This will further boost NSN’s 4GLTE equipment business.

NSN’s 4GLTE equipment is widely used by carriers around the globe. In the secondquarter of 2013, the NSN segment generated $3.64 billion of revenues. Both Europe and Asia-Pacific together contributed nearly 56% of the revenues. Thus, we believe that such major contract wins in Europe and Asia will certainly drive the company’s top line.

NSN used to be a 50-50 joint venture between Nokia and German-based Siemens AG (SI). Recently, Nokia paid $2.15 billion to acquire NSN completely.

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

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