What Are the Key Drivers of Nokia’s Networks Segment?


Mar. 23 2018, Updated 5:15 p.m. ET

Revenue growth in three out of five verticals

In 4Q17, Nokia’s (NOK) Networks segment experienced YoY (year-over-year) growth in mobile networks, applications and analytics, and IP (Internet protocol) and optical networks driven by strength in its product portfolio. Nokia has stated that the performance of its AirScale product has been good. According to the company, the AirScale Radio Access Solution “reboots access for infinite capacity, invisible sites and instant innovation.”

Earlier this year, Nokia announced that it had partnered with NTT DoCoMo (DCM) in the 5G (fifth-generation) space. Nokia’s 5G team also claims to have made an end-to-end call using the commercial 5G New Radio.

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Important wins by Nokia

Nokia gained market share last year in the 4G LTE (fourth-generation long-term evolution) space. The company announced important wins with customers, including Mexico’s ALTAN Redes, Brazil’s TIM, and China Unicom (CHU). Nokia believes its increasing footprint in 4G will impact its 5G market share and help it compete against peer companies such as Europe’s (EFA) Ericsson (ERIC) and China’s (FXI) Huawei.

Transition to 5G

Nokia has repeatedly stated that 5G technology is far different than LTE. 5G technology will be used across industries and business verticals from mobile access to cloud core as well as software-defined networking, IP routing, and fixed networks, among others. Enterprises will likely be looking to reinvent their networks, providing an opportunity for Nokia to gain traction and offer its portfolio of products and solutions to aid in such transitions.

Nokia’s Networks segment reported revenue of 5.8 billion euros in 4Q17, down from 6.1 billion euros in 4Q16. The table above shows a summary of Networks revenue in the quarter that ended in December 2017.


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