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Nokia Networks: Strong order book drives growth

January 08, 2015
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Finland-based data networking company Nokia Networks has done quite well in terms of expanding its network infrastructure in the past one year. In India, the company won about a dozen deals during January-June 2014. This included the modernisation of 2G and 3G networks, deployment of a 4G network, Wi-Fi solutions, security solutions and device management. On the global front, the deployment of its network infrastructure in North America and Greater China helped the company achieve strong net sales growth in the first half of 2014.

In 2014, the company entered into strategic partnerships with various other network equipment manufacturers and telecom solution providers to enhance its own product portfolio. In addition, it collaborated with Hewlett-Packard and Juniper Networks to build cloud-based networks in order to help telecom service providers in expanding their mobile broadband services.

Signing contracts in India

Nokia Networks has emerged as a popular choice for operators who are focusing on improving customer care services and not only concentrating on the key performance indicators. In the first half of 2014, Nokia Networks was awarded contracts by Vodafone India and Idea Cellular to upgrade and modernise their existing 2G and 3G networks. While Vodafone awarded a five-year contract to deploy single radio access network (RAN) in 19 circles, Idea signed a three-year agreement with Nokia Networks for enhancing the operator’s network in seven circles. In the same month, the company also secured a contract from Telewings Communications for its network expansion. Under the contract, Nokia Networks provided radio access equipment, and operations and maintenance services to the operator in the Assam circle.

Recently, the company entered into partnerships with Bharti Airtel and Tata Teleservices Limited (TTSL) for enhan-cing their 3G networks. As per its contract with Bharti Airtel, Nokia Networks will upgrade Airtel’s 3G network in the Mumbai, West Bengal and Bihar circles. Further, as part of the same deal, it would reconfigure Airtel’s existing spectrum in the 900 MHz band with 3G spectrum in the 2100 MHz band to form a “dual band, dual carrier” 3G network in the Mumbai circle. Under the contract with TTSL, Nokia Networks will upgrade its 3G network to high speed packet access in the Karnataka, Haryana and Punjab circles. Nokia Networks will also provide Flexi Multiradio 10 base stations with radio network controllers and Flexi Lite base stations for enhancing TTSL’s network in the densely populated areas.

Besides, it received a few contracts in the security solutions domain. It also signed a contract with Reliance Jio Infocomm Limited to provide security solutions for the 4G network roll-out planned by the operator in 2015.

International endeavours

At present, the Indian telecom market is dominated by developments in the 3G network space while 4G is yet to take off. Therefore, Nokia Networks was able to win contracts from Indian operators only for upgrading their 2G and 3G networks. However, internationally, the company managed to sign deals for expanding 4G networks in countries like Russia and China. In early 2014, it provided network equipment and services for expanding VimpelCom Limited’s 4G network in central and southern Russia. In another development, Telenor awarded a five-year contract to Nokia Networks to provide RAN equipment and services to expand its 2G, 3G and 4G networks across Europe and Asia.

Financials

The demand for Nokia Networks’ resources and technology has increased in the recent past and this is clearly reflected in its financials. The company reported an increase in its non-IFRS operating profits from Euro 217 million for the quarter ended September 2013 to Euro 397 million for the corresponding quarter in 2014. According to the company, the increase in profitability was primarily on account of its long term evolution network deployments across the world. Nokia Networks also achieved 13 per cent growth in its net sales, from Euro 2.6 billion in July-September 2013 to Euro 2.9 billion in July-September 2014. Going forward, the company’s sales are expected to increase further as the recent contracts would bring in more revenues.

In India, the company signed around 10 deals in the quarter ended September 2014. The monetisation of data services by telecom operators helped Nokia Networks achieve the highest revenue growth for its Indian operations in July-September 2014. According to the company, it surpassed its counterparts in terms of revenues in India during the same period.

Outlook

Given the increased demand for data services, the company is expected to grow in the network management segment across the globe. Further, the upcoming spectrum auctions and introduction of initiatives like Digital India will provide a growth stimulus to the company. The 4G network contracts already won by Nokia Networks will help the company gain an edge over its competitors for business opportunities in India.

 
 
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