Study of NOK

Study of NOK

• 02/26/2020 – changes are coming to NOK, seems to be good changes

Nokia to Weigh Strategic Options as Profit Pressure Mounts

Nokia Oyj is exploring strategic options as fierce competition puts pressure on the Finnish network equipment maker’s earnings, people familiar with the matter said.

The company is working with advisers to consider potential asset sales and mergers, the people said, asking not to be identified because the information is private.

Nokia shares have lost roughly a third of their value over the past year before news of its deliberations. The company’s American depositary receipts rose as much as 13% Wednesday. The ADRs were up 5.2% to $4.12 at 1:37 p.m. in New York trading, giving the company a market value of about $23 billion.

The firm cut its outlook and suspended its dividend in October, saying it’s not expecting a major recovery in profit until 2021. That’s ratcheting up pressure on Chief Executive Officer Rajeev Suri to act.

Deliberations are ongoing, and there’s no certainty they will lead to a transaction, the people said. A representative for Espoo, Finland-based Nokia declined to comment.

One possibility Nokia could also consider is combining with a competitor like Ericsson AB or partnering in certain business areas. Still, such a move would face significant hurdles including political pressure to preserve jobs as well as antitrust scrutiny. The limited number of direct rivals to Nokia would also require the company to consider interest from further afield — like technology companies or wireless operators — if it were to ever seek a full sale.

The December announcement that Nokia Chairman Risto Siilasmaa would step down stirred speculation about deeper changes at the company. The firm is in a fierce rivalry with Ericsson and China’s Huawei Technologies Co., as the three dominant players seek to benefit from phone carriers’ investments in next-generation mobile networks.

The U.S. should be “actively considering” investments into Nokia or Ericsson to counter the threat posed by China’s dominance of emerging 5G technology, Attorney General William Barr said this month. Larry Kudlow, President Donald Trump’s top economic adviser, later said the U.S. government isn’t in the business of buying companies. He has since announced plans by the White House to hold a conference with Huawei rivals to try to accelerate development of affordable competing products.

— With assistance by Kara Wetzel

• 02/20/2020 – lots of carriers are taking steps to deter Huawei’s dominance.

Carriers Take Multi-Vendor Approach to Deter Huawei Dominance

They say “One man’s loss is another man’s gain”. True to this dictum, telecom operators are seeking to rely on multiple networking vendors rather than a single equipment manufacturer like Huawei to counter its stranglehold in the market and negate the possible adverse effects in case of a supply disruption due to the coronavirus outbreak.

The Trump administration is also contemplating to back various Nordic firms to deter Huawei’s operations. This is likely to be either achieved through direct funding or through consortium of private American and allied companies, backed by a $1 billion-plus government funding. The government has been encouraging various in-house corporations like Microsoft and Dell to build 5G-centric hardware so that the bulk of 5G architecture and infrastructure is made by U.S. firms.

Industry’s Survival Strategy

Keeping in mind the magnum opus standing of Huawei in the global domain, various telecom service providers like Deutsche Telekom AG DTEGY and Vodafone Group Plc VOD are dependent on it. This, in turn, will jeopardize the flexibility of such telecom operators. Hence, they are devising plans to work with multiple networking vendors rather than depending on a single equipment manufacturer with O-RAN (Open Radio Access Network) and TIP (Telecom Infra Project) alliance for establishing a flexible networking architecture.

Vodafone, for example, has started to clinch small contracts from the O-RAN alliance, with an aim to standardize RAN hardware and software and proactively expand its vendor ecosystem in Europe, which is currently being ruled by Huawei. The RAN architecture utilizes virtualized network functions and Nokia is helping e-commerce company, Rakuten, to deploy a virtual network in Japan.

Final Thoughts

Telecommunications has become one of the most dynamic industries in the world with the emergence of avant-garde technological changes. Several technological disruptions including 5G, IoT and edge computing have redefined the broader industry metrics in 2019, and are expected to be the game changers in 2020 as well. The accelerated deployment of 5G across the globe is set to enhance the security, scalability and universal mobility of the telecommunications industry.

With such healthy potential, a steady supply of core telecommunication components is essential for the overall development of the industry. This, in turn, probably justifies the multi-vendor approach of the telecom carriers to avert a possible crisis if Huawei is banned by a particular country or supply is disrupted.

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• 02/20/2020 – 5G technology is THE KEY for US competitiveness, US cannot lose to China. US and western world countries are working on plans to deter Huawei, which might be good for NOK and ERIC.

Huawei says US push to create a 5G rival ‘would be a challenge’

1. U.S. plans to create a 5G rival to Huawei could be a “challenge,” Paul Scanlan, chief technology officer of Huawei’s networking business told CNBC.
2. There are rising calls from U.S. politicians to find alternatives to Chinese telecoms equipment maker Huawei for 5G, given the fact that Washington believes the company is a national security risk.
3. Scanlan said, however, that 5G standards have taken 10 years to create and implement and creating a rival quickly would be difficult.

Meanwhile, Larry Kudlow, the White House’s economic advisor, said in an interview with the Wall Street Journal that the “big-picture concept is to have all of the US 5G architecture and infrastructure done by American firms, principally.” He added that Ericsson and Nokia could be a part of that.

In the U.K., Tobias Ellwood, chair of the House of Commons Defence Select Committee, said the Five Eyes — an intelligence alliance between Australia, Canada, New Zealand, the U.K. and the U.S. — should develop its own Huawei rival.

“What I think we need to recognise is that if we do allow Huawei in temporarily, we need to quickly create an alternative, which doesn’t exist at the moment. So you look at Cisco, Ericsson, Nokia, you need to get these companies together with some international state funding to create our own 5G capability,” the lawmaker said in a recent interview with Global Defence Technology magazine.

U.S. lawmakers including Rubio have called for the government to back an open source 5G architecture. The result, they claim, would allow new players to enter the networking equipment game for specific components rather than competing with Huawei in the entire architecture.

• 02/19/2020 – US’s pressure on Europe is mounting to block Huawei while promote ERIC, NOK and Samsung

U.S. urges EU to use 5G by Ericsson, Nokia, Samsung, seen on par with Huawei

• 02/16/2020 – it becomes a bipartisan great efforts to halt Huawei, which could benefit NOK and ERIC very well. Trump admin might use this as a great leverage to have a trade pact with UK

Pelosi warns US allies: ‘Don’t go near Huawei’

MUNICH — U.S. House Speaker Nancy Pelosi on Friday warned nations against doing business with Chinese telecom giant Huawei and called on other nations to work with the U.S. as the globe races to develop 5G networks.

Her comments come after the Justice Department brought new charges against Huawei, accusing it of racketeering and plotting to steal trade secrets from U.S. companies.

“This is the most insidious form of aggression, to have that line of communication, 5G, dominated by an autocratic government that does not share our values,” Pelosi, D-Calif., told an audience at the Munich Security Conference.

“If you want to build a collective conscience of values and respect for human rights and the rest, don’t go near Huawei and instead, let’s internationalize and build something together that will be about freedom of information,” she added.

elosi’s hard stance against Huawei represents one of her few areas of agreement with President Donald Trump. The Trump administration is working to isolate Huawei from developing a larger foothold in U.S. partner countries. The administration has specifically worked to keep members of the “five eyes” intelligence-sharing group — the U.S., U.K., Canada, Australia and New Zealand — from working with Huawei.

Last month, the Trump administration expressed disappointment after the U.K. announced it would allow Huawei to have limited access to some British 5G mobile networks. “The United States is disappointed by the U.K.’s decision,” a senior Trump administration official wrote in a Jan. 28 emailed statement to CNBC. The official added that the Trump administration will work “with the U.K. on a way forward that results in the exclusion of untrusted vendor components from 5G networks.”

U.S. officials have long complained that Chinese intellectual property theft has cost the economy billions of dollars in revenue and thousands of jobs and that it threatens national security. China maintains that it does not engage in intellectual property theft.

“I’ve been tracking China for 30 years on trade, intellectual property and the rest of it, and I tell you unequivocally, without any hesitation: Be very careful … unless you want to end up with a society like China or an economy like China, which is not in the free enterprise mode,” Pelosi said, reiterating that countries need to work with the U.S. on 5G development.

A White House official told a small group of reporters on the sidelines of the Munich forum that the U.S. wants to develop partnerships with the telecom industry in order to counter Huawei’s offerings.

Robert Blair, White House special representative for international telecommunications policy, also called on the U.K. to take a “hard look” at its decision to use Huawei equipment.

Vice President Mike Pence told CNBC last week that London’s decision could jeopardize trade talks between the U.K. and the United States.

“We’re anxious to build our economic ties, but we have made it clear to Prime Minister [Boris] Johnson and to officials in the U.K., that as we expand opportunities to build out 5G across this country … we want to see our companies meet the needs in the United States and U.K. and among all our allies without the compromise of privacy and the compromise of security that necessarily comes with Huawei and control by the Chinese Communist Party,” Pence told CNBC’s Wilfred Frost.

Read more: Vice President Pence: ‘We’ll see’ if UK decision on Huawei is a deal breaker for a trade pact

When asked about the issue by CNBC on his first day as secretary of Defense, Mark Esper said he was “very concerned about Chinese technology getting into our systems or the systems of our allies.”

“Huawei is the poster child right now for that,” Esper said, adding that the U.S. trade war with China is as much about national security as it is about the economy.

In 2018, the Pentagon halted sales of Huawei and ZTE mobile phones and modems on military bases around the world, citing potential security risks. Huawei and ZTE have previously denied allegations that their products are used to spy on Americans.

• 02/13/2020 – Is Nokia a strategically vital asset for US government and military especially?

Even If the U.S. Government Doesn’t Buy It, NOK Stock Is Looking Good
NOK stock would benefit from an unexpected buyer

But two pieces of good news have Nokia’s stock on the mend over the past week. The first is that Nokia reported better-than-expected earnings last Thursday. Even more surprisingly, the United States’ Attorney General William Barr said that the U.S. government, perhaps in combination with its allies, should acquire a majority stake in either Nokia or Ericsson (NASDAQ:ERIC).

Surely, if you had told Nokia investors of 10 or 15 years ago about this they’d be shocked. Why would a leader European cellular company end up as an arm of the U.S. government? Yet, the proposal actually does make some strategic sense. Here’s why the bottom may finally be in for Nokia stock.

Nokia: Strategically Vital Asset?

Over the past year, it’s become increasingly clear that the United States will need to make back-up plans for many of its technological networks. While the trade war with China has simmered down for the time being, there’s still a clear lack of faith between the two parties.

As such, it’s vital to have alternatives within the supply chain. The U.S. government – and military in particular – is unlikely to accept a world where China is the only manufacturer of key components.

This brings us to Huawei and 5G. Huawei had built a solid lead in 5G technology and deployments. Even key U.S. allies like the United Kingdom have given Huawei 5G business rather than listening to U.S. requests to avoid Chinese tech providers.

In response, Attorney General Barr said recently that the U.S. should make a move and take a financial stake in Nokia or Ericsson. Here was his reasoning:

“There are only two companies that can compete with Huawei right now as 5G infrastructure suppliers: Nokia and Ericsson. They have quality, reliable products that can guarantee performance. They have proven successful in managing customers’ migration from 4G to 5G. The main concern about these suppliers is that they have neither Huawei’s scale nor the backing of a powerful country with a large market, like China,”

Barr criticized efforts from others in the administration to try to build a homegrown rival, saying that time was of the essence. In fact, Barr said directly that action was needed to “blunt” Huawei’s momentum as quickly as possible and make sure that either Ericsson or Nokia has the “staying power” to win big contracts and serve as a reliable supplier.

The Profit Motive

It’s important to consider that Huawei is a private company. It offers no stock to public shareholders, and as such, doesn’t have to worry about quarterly earnings, dividends, or other such matters. Seemingly, Huawei has significant ties to the Chinese government and as such, it can balance profitability with other national and strategic concerns.

Ericsson and Nokia, by contrast, have to report to shareholders on a regular basis. And when they come up short, investors take action. So far, Ericsson has managed a successful turnaround while balancing strategic and economic incentives. Nokia, however, has not fared so well.

• 02/11/2020 – Sprint and T-Mobile’s approval of merge is very positive for NOK

Sprint Surges After Federal Court Approves $26 Billion T-Mobile Merger
Sprint and T-Mobile are closing in on a two year, $26 billion merger that will combine the third and fourth largest wireless carriers in the U.S.

• 07/30/2018 – T-Mobile and Nokia’s $3.5 Billion, Multi-year 5G Network Agreement will provide end-to-end 5G solutions for T-Mobile’s nationwide 5G network. This contract has been in cold storage — until this morning’s merger approval — adding to $NOK upside

T-Mobile signs $3.5 billion deal with Nokia for 5G technology

T-Mobile and Nokia have announced a $3.5 billion deal that will see Nokia provide T-Mobile with “complete end-to-end 5G technology, software, and services” as the carrier continues to build out its 5G infrastructure.

“We are all in on 5G,” commented T-Mobile’s chief technology officer Neville Ray in the announcement. Nokia will help build T-Mobile’s 5G network on both the 600 MHz and 28 GHz millimeter wave portions of the spectrum, in accordance with the 3GPP’s 5G New Radio (NR) standards.

It’s a major move forward on both sides of the deal. T-Mobile is one of the first major carries to publicly announce an investment into 5G hardware, and it gives Nokia an edge over fellow 5G networking providers like Ericsson and Huawei, all of which are looking for new opportunities to expand as 4G network growth begins to slow. Plus, it’s yet another concrete sign that we’re finally getting closer to actual 5G networks beginning to roll out in the increasingly near future.