Nokia Looks To Boost U.S. Business With SAC Wireless Buy

+13.48%
Upside
3.54
Market
4.02
Trefis
NOK: Nokia logo
NOK
Nokia

In a bid to enhance its network infrastructure and deployment business in the U.S., Nokia (NYSE:NOK) has bought indoor wireless specialist SAC Wireless for an undisclosed sum. The acquisition, expected to close by the end of the third quarter this year, is likely to help the Finnish company improve its share in the network implementation market and deliver improved end-to-end network services to its customers. Adding to Nokia’s existing capabilities in network deployment, SAC Wireless is expected to help address complex issues related to distributed antenna systems (DAS), 4G upgrades and backhaul connectivity bottlenecks. [1]

SAC Wireless has about 450 employees and specializes in improving wireless coverage in public places such as hospitals, government institutions, stadiums and enterprises by using distributed antenna systems (DAS). Buying SAC Wireless is in line with Nokia’s strategy of expanding its presence in the budding small cell market, and it must be hoping that the DAS specialist’s relationships with leading North American carriers including AT&T (NYSE:T) and Verizon (NYSE:VZ) helps it gain contracts as well. In fact, AT&T is planning to deploy more than 40,000 small cells by the end of 2015 as part of its multi-billion dollar network overhaul program Project Velocity IP (VIP), which could be a good business opportunity for Nokia. [2] [3]

We have a price estimate of $7.30 for Nokia, which is slightly below the current market price.

Relevant Articles
  1. Is Nokia Stock A Buy At $4?
  2. Nokia Stock Looks Undervalued At $4
  3. Nokia Stock Poised For Recovery After Dismal Week?
  4. Nokia Stock Looks Set For Rally After Rough Month
  5. Can Nokia Stock Continue Weathering The Storm In The Broader Markets?
  6. Can Nokia Stock Continue Its Post-Earnings Outperformance?

See our complete analysis for Nokia stock here

Acquisition Benefits To Nokia

The acquisition is likely to help Nokia deal with several problems associated with indoor network deployments such as site acquisition and permissions, sub-contractor availability and quality control because of SAC Wireless’ expertise in network implementation, which Nokia claims will complement its ability to “self-perform typically sub-contracted services”. [1]

One of the primary offerings from SAC Wireless is The Engine Room, for managing the architecture, engineering as well as regulatory aspects of the network in a bid to improve productivity and reduce costs. The company also offers “self-perform implementation” of small cells, DAS, radio access network (RAN) construction, design and its management.

Mesaplexx Acquisition

With an aim to boost its radio capabilities, Nokia acquired Australian firm Mesaplexx last month. The company stated in its press release that Mesaplexx is a specialist company dealing in development of compact and efficient radio frequency filter technology used in the wireless industry. [4] Nokia expects the acquisition to help it improve its radio systems by making them smaller, lighter and less energy consuming. Mesaplexx could also help the company develop radio systems for deploying higher capacity networks with minimum signal losses and reduced costs.

Nokia could benefit immensely if it can develop more efficient and cost-effective radio systems. The enhanced radio systems could not only help improve the company’s declining Network sales by way of increased contract wins, the cost savings could also help the company further improve its profit margins.
Notes:
  1. Press Release, Nokia, July 2 2014 [] []
  2. AT&T Gets ‘Opportunistic’ With 4G Small Cells, Light Reading, May 19 2014 []
  3. AT&T plans small cell push for 2014 that is actually quite large, Fierce Wireless, Dec 19 2013 []
  4. Press Release, Nokia, June 5 2014 []