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Nokia Furthers Partnership With China Unicom on 5G Ecosystem

Zacks Equity Research
·4-min read

Nokia Corporation NOK today announced that it has been selected by China Unicom to support the build-out of the 5G standalone core network of the latter. This marks an expansion in the Finland-based telecom gear maker’s long-standing relationship with the Chinese communications service provider. The financial terms of the deal were not disclosed by the parties.

Nokia has secured almost a 10% share of China Unicom’s 5G core network. The deal comprises products from Nokia’s Cloud Packet Core portfolio, including the Cloud Mobile Gateway. The product offers the 5G standalone Session Management function and User Plane function, apart from supporting the 4G Serving Gateway and the Packet Data Network Gateway in the operator’s network.

Currently, Nokia has a 17% market share in China Unicom’s expanding VoLTE network, where it has deployed Nokia’s cloud-based vIMS platform. Nokia has helped in getting China Unicom’s 4G network established and intends to support the service provider in its 5G networks. The Nokia Cloud core products are complemented by Data Refinery and NetAct, deployed on its CloudBand.

Nokia is focused on its strategy that hinges on four priorities. The first one is to lead in high-performance end-to-end networks with its communications service provider customers. The second priority is based on its pursuit to expand network sales to select vertical markets. Building a strong standalone software business is the third strategic priority. The fourth pillar aims to create new business and licensing opportunities in the consumer ecosystem.

Nokia is developing its 5G portfolio, strengthening AirScale and advancing the capabilities of its ReefShark chipset. The company is working with multiple partners to support its ReefShark family of chipsets, which are used in many base station elements. In Mobile Access, it expects the improvement to be driven by increasing shipments of ‘5G Powered by ReefShark’ portfolio and product cost reductions.

The company’s end-to-end portfolio includes products and services for every part of a network, which help operators enable key 5G capabilities such as network slicing, distributed cloud and industrial IoT. It facilitates customers to move from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and automation. Nokia is witnessing healthy underlying momentum in its focus areas of software and enterprise, which augurs well for its licensing business.

At the same time, the company seeks to expand its business into targeted, high-growth and high-margin vertical markets to address opportunities beyond its primary markets. It had earlier announced plans to accelerate strategy execution, sharpen customer focus and reduce long-term costs. This, in turn, is likely to position the company as a global leader in the delivery of end-to-end 5G solutions.

Nokia has a long-term earnings growth expectation of 13.3% compared with 14.6% of the industry. The stock has surged 73.5% compared with the industry’s growth of 30.9% in the past three months.



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

Some better-ranked stocks in the broader industry are Turtle Beach Corporation HEAR, Ooma, Inc. OOMA and Acacia Communications, Inc. ACIA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Turtle Beach has a trailing four-quarter positive earnings surprise of 46.4%, on average.

Ooma has a trailing four-quarter positive earnings surprise of 228.2%, on average.

Acacia has a trailing four-quarter positive earnings surprise of 17.7%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.

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Nokia Corporation (NOK) : Free Stock Analysis Report
 
Turtle Beach Corporation (HEAR) : Free Stock Analysis Report
 
Acacia Communications, Inc. (ACIA) : Free Stock Analysis Report
 
Ooma, Inc. (OOMA) : Free Stock Analysis Report
 
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