Nokia Ends 2014 With Record 34 Deals In India

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Nokia (NYSE:NOK) seems to be doing well with its leaner and reinvented business structure, especially when it comes to expanding its networks business in the Asia-Pacific region. The telecom equipment maker won 34 important deals in India in 2014, its highest tally in four years, involving the modernization of 2G and 3G networks, 4G deployment, WiFi solutions, security solutions and device management. With this, Nokia now leads the country’s 4G LTE market in terms of contract wins and is also the market leader in 2G, 3G, Managed Services and GSM-Railways. [1] ((Nokia Networks in talks with Vodafone, Idea Cellular & Uninor to roll out 4G services, Economic Times, Feb 19 2015)) ((Nokia Siemens leads Indian 4G / LTE market, Telecom Lead, March 5, 2014))

The deals include a $200 million contract from market leader Bharti Airtel to build India’s first 4G network, a five-year contract with wireless major Vodafone for the modernization of its radio access network (RAN) equipment and a three-year network upgrade deal with India’s third largest carrier Idea Cellular. Following the recent deals, Nokia is now working with Vodafone in 19 out of the 22 telecom circles in India, and has also become the biggest equipment provider to Idea Cellular in the country. The company also partnered with other key telecom players such as state-owned operators MTNL and BSNL, Uninor, Videocon (for FDD-LTE 4G deployment in six circles), Tata Tele and the Indian railways. Although the Indian 4G market is still in its nascent stages, early contract wins could help the company understand the market better than rivals and gain a competitive edge for future contracts. [2] [3] [4] [5] ((With 12 deals in kitty, Nokia set to sail high, VoiceNdata, July31 2014)) [6] [7] [8]

Following the sale of its handset business to Microsoft, Networks is the largest business division for Nokia, contributing about 90% of the company’s sales and about 50% of the company’s value, according to our estimates. It is worth noting that sales in Asia-Pacific declined by 2% to $3.3 billion in 2014. Going forward, we expect the company’s Networks sales to improve as the recent contract wins start bringing in revenues.

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We have a price estimate of about $8 for Nokia, which is in line with the current market price.

See our complete analysis for Nokia stock here

Other Network Deals In 2014

At the start of last year, Nokia inked a major deal with Russia’s third largest telecom operator, VimpelCom, to provide network equipment and services for expanding its 4G network in central and southern Russia, most of the Ural and Volga regions as well as Siberia. The company also renewed its contract with Taiwan’s largest telecom player Chunghwa Telecom in December 2013, to help in its capacity expansion.

Nokia also bagged a five-year deal with Telenor in May 2014 to provide radio access network (RAN) equipment and services to expand its 2G, 3G and 4G network across Europe and Asia. [9] The company also recently signed a deal with Algeria-based Algérie Télécom, to deploy North Africa’s first commercial LTE network last year. [10]

In China, Nokia did well in winning LTE contracts with China Mobile (NYSE:CHL) and China Telecom(NYSE:CHA), and was one of the leading foreign player in the Chinese LTE buildout. Nokia also won two large LTE contracts with Everything Everywhere and Vodafone in Europe last year.

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Notes:
  1. Nokia Website []
  2. ref:2 []
  3. Nokia Networks bags 3G contract from Bharti Airtel, Nokia, Nov 11 2014 []
  4. Bharti Airtel, Nokia Networks to launch ultrafast 4G services in India’s first FDD-LTE on 1800 MHz, Nokia, Jan 27 2015 []
  5. Nokia Networks modernizes, expands TATA DOCOMO’s 3G network, Nokia, Dec 10 2014 []
  6. Nokia to modernize Idea’s networks, VoiceNdata, July30 2014  []
  7. Nokia Networks bags 12 deals in India during Jan-June 2014, First Post, Aug 1 2014 []
  8. Telenor to acquire 100% stake in Uninor, Times of India, June 14 2014 []
  9. Press Release, NSN, May 22 2014 []
  10. Press Release, NSN, May 21 2014 []