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Alphabet Arm in Talks to Buy Nokia's Airplane Broadband Unit

Zacks Equity Research
Updated

Rumors of Alphabet Inc.’s GOOGL Google division’s plans to acquire Nokia’s airplane broadband business are doing the rounds. Flight passengers will have an access to high speed Wi-Fi service on board if the deal materializes.

Nokia’s in-flight internet business is based on LTE A2G cellular system which offers high speed internet services to flight passengers by creating a direct link between the aircraft and the ground.

The deal will help Google to expand its internet services portfolio. Moreover, the company will gain share in the in-flight internet services market.

Coming to the price performance, shares of Alphabet have returned 23.1% over a year, outperforming the industry’s rally of 11%.

 



 

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Growing Airplane Internet Services Market

Reportedly, passengers now need to pay very high charges for internet services on board. Thus, there is a rising demand for high speed internet services at economical rates. The latest move will enable Google to capitalize on this and reap benefits.

According to a recent study by London School of Economics based on International Air Transport Association data, global in-flight broadband services market is expected to reach $130 billion by 2035.

Moreover, the study shows that people travelling over long distances prefer to e-commerce activities like online shopping. This is expected to help the company generate $19 billion airline revenues by 2035.

Further, if the deal materializes, the company might club its entertainment products, like YouTube or Play Music with its own Wi-Fi system on plane.

The move will enable Google to pose competition against some existing players in the market like GOGO, AeroMobile Communication and many more.

To Conclude

Google remains focused on providing high speed internet services across the world. The company’s latest move bodes well toward the expansion of connectivity business.

Google Fibre is one of the company’s connectivity project that offers internet services to up to 1000 megabits per second.

With the project Loon, the company plans to connect the world with internet-beaming balloons by providing high speed internet access to remote areas of the globe. Google has been successful in launching its balloons from Puerto Rico and moving them toward Peru.

Further, the company teamed up with Singapore-based, StarHub, to launch Google Wifi mesh router system, which provides advanced Wi-Fi connectivity at home.

We believe Google is trying to strengthen its foothold in the internet services market. The company’s innovative endeavors have helped it to adapt to the evolving market trends and tread on a growth trajectory.

 

Alphabet Inc. Revenue (TTM)

 

Alphabet Inc. Revenue (TTM) | Alphabet Inc. Quote

 

Zacks Rank & Stock to Consider

Currently, Alphabet carries a Zacks Rank #4 (Sell).

Investors interested in the broader technology sector can consider some better-ranked stocks like Autohome ATHM, Match Group MTCH and Marchex MCHX. While Autohome and Match Group sport a Zacks Rank #1 (Strong Buy), Marchex carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Autohome, Match Group and Marchex is currently pegged at 33.48%, 12.5% and 15%, respectively.

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Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
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