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Nokia Unit, Taiwan Mobile in LTE Pact

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Nokia Corporation’s (NOK) wholly-owned subsidiary Nokia Solutions and Networks (“NSN”) has recently struck a deal with Taiwanese GSM mobile phone operator, Taiwan Mobile, to supply 4GLTE equipment. Financial terms and other related details of the contract have not been disclosed.

The new LTE agreement with Taiwan Mobile will further extend NSN’s 27-year long relationship with the Taiwanese carrier as NSN was the sole 2G and 3G deployment equipment supplier for the mobile operator.

In Dec 2013, NSN also renewed its contract with the largest Taiwanese telecom operator, Chunghwa Telecom Co. Ltd. (CHT) to supply infrastructure for the carrier’s HSPA+ network capacity expansion. Chunghwa intends to offer LTE services from mid-2014 and has selected NSN as its major vendor.

In the recently concluded fourth quarter of 2014, the NSN segment reported revenues of nearly $4.2 billion, down 22% year over year. Whereas, it’s Asia-Pacific region contributed the highest business of nearly 29% in the same quarter.

Hence, we believe that such aggressive deployment of 4GLTE network across China and Taiwan coupled with higher capital spending on network upgrades in India, Korea and Indonesia will drive the company’s top line going forward.

Nokia has decided to divest its core mobile handset and its services division to Microsoft Corp. (MSFT). The deal is expected to close in the first quarter of 2014. Post the divestiture, Nokia Solutions and Networks will become the company’s chief business division.

Nokia currently carries a Zacks Rank #2 (Buy).

A better-ranked stock worth considering in this sector is Juniper Networks, Inc. (JNPR) with a Zacks Rank #1 (Strong Buy).

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