Financial details of deal kept under wraps
Nokia (NOK) recently announced winning a multiyear network development contract from United States Cellular (USM). The contract involves Nokia building a 5G network for US Cellular across its markets. US Cellular serves 5.0 million customers in 22 states across the United States. Nokia’s contract with US Cellular is expected to run for five years.
Unlike the T-Mobile (TMUS) deal announced last year, Nokia didn’t reveal the financial value of the US Cellular contract. In the case of T-Mobile, Nokia secured a multiyear 5G contract valued at $3.5 billion. Nokia also last year signed Chinese operators China Mobile (CHL), China Telecom (CHA), and China Unicom (CHU) for 5G-related deals worth $2.3 billion combined.
Nokia’s networks business returns to growth
The vast majority of Nokia’s revenue comes from network equipment sales. The company’s networks business delivered a 7.0% YoY increase in revenue to $7.0 billion in the fourth quarter, which ended in December. Nokia’s networks revenue had been sinking before the company started winning big 5G contracts. Ericsson (ERIC), which also recently won a contract from US Cellular, reported a 6.0% YoY increase in its networks revenue in the December quarter.
5G is a huge growth opportunity for operators
Mobile operators around the world are banking on 5G technology to enable them to open up new revenue sources, especially in the enterprise market. Given 5G’s ultrafast connection speeds, operators see opportunity in it to expand the service they offer to business customers. Verizon (VZ) and AT&T (T), for instance, are already exploring 5G Internet connectivity for business users.