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Nokia (NOK) Expands 4.5G Network Infrastructure Portfolio

Zacks Equity Research

Nokia Networks, a division of Nokia Corp. NOK recently declared that it has signed contract agreements to install 4.5G wireless network infrastructure with 110 wireless carriers globally. The capabilities Nokia is rolling out under the 4.5G and 4.5G Pro labels map to the LTE-Advanced Pro standard that was included in the 3GPP's Release 13 earlier this year. Nokia Networks acquisition of its rival company Alcatel-Lucent for $17.4 billion last year has transformed it into a formidable player in the global telecom infrastructure market.

Nokia’s network infrastructure is primarily centred on telecom operators. The buyout of the wireless business of Alcatel-Lucent has significantly strengthened Nokia’s foothold in North America. Leading U.S. telecom operators, namely Verizon Communications Inc. VZ and AT&T Inc. T are prominent customers of Alcatel-Lucent. Additionally, Alcatel-Lucent has a strong presence in China, while Nokia enjoys considerable dominance in Europe and Asia. 

Importantly, Alcatel-Lucent has lucrative assets to support the enterprise segment, which Nokia intends to capitalize on, to get a strong foothold in the sector already dominated by large network infrastructure solution providers like Cisco Systems Inc. CSCO and Huawei Technologies Co. Ltd.  

The merged entity can effectively capitalize on the emerging Internet-of-Things (IoT) platform and offer competent triple-play voice, video and data solutions worldwide. The core focus areas will be next-generation 5G wireless technology, IP and software, defined networking, cloud-based solutions, big data analytics, and sensors and imaging.

The takeover of Alcatel-Lucent by Nokia has created a network solutions behemoth in the industry with a significant global customer base and solid operational efficiencies. Nokia boasts strong technical expertise in professional managed services and customer experience management apart from a rich portfolio of mobile broadband infrastructure and 4G LTE network. On the other hand, Alcatel-Lucent enjoys relative advantage in IP-based products, optical networking, cloud computing/software-defined networking, fixed broadband network and professional services.

Price Performance of Nokia

So far, 2016 has turned out to be a pathetic one for Nokia. Year to date, the stock price of the company plunged a substantial 34.05%, underperforming the Zacks categorized Wireless Equipment industry that declined 6.13% in the same time frame. However, Nokia is restructuring its wireless infrastructure gear making wings to capitalize on upcoming 5G network, IoT and lucrative enterprise solutions business. These factors are the primary reason behind the company currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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