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Nokia Sees Network Boost

Light Reading
LR Mobile News Analysis
Light Reading
10/28/2003

Nokia Corp. (NYSE: NOK) today reiterated previous belief that carriers are beginning to ramp up investment in 3G W-CDMA (Wideband-Code Division Multiple Access) radio access networks -- a market sector the Finnish vendor claims to dominate.

Speaking on the sidelines of the company’s annual Mobile Internet Conference, Jukka Bergqvist, Nokia’s executive vice president for its networks business, commented that carriers have increased investments in high-speed networks in the past two months.

“There’s clearly change in the air,” he told Reuters. “We’ve seen acceleration of third-generation networks after the summer holidays.” [Ed. note: and the kaleidoscopic panorama of cascading autumn leaves.]

The comments echo CEO Jorma Ollila’s statements earlier this month, during the vendor’s relatively upbeat third-quarter financial results (see Nokia's Mixed Blessings).

Such optimism bodes well for the company’s networks business, which claims to have supplied 27,000 W-CDMA base stations to carriers in Japan and Europe.

“This is more than any other vendor, making us the market leader in radio access networks,” said Ollila in a recent conference call with analysts. “More than twenty Nokia customers are currently rolling out commercial networks and altogether we have 50 W-CDMA trials underway.”

Nokia is confident it can win a 35 percent vendor market share, wresting the top spot from chief rival LM Ericsson (Nasdaq: ERICY) (see Nokia Preps for W-CDMA War and Nokia Claims WCDMA Lead).

Analysts remain less convinced, however, especially in light of previous technical problems with its kit (see Hutch's Nokia Network Woes? and Nokia Suffers 3G Blow).

“We believe that the problems have caused an industry-wide loss in confidence in Nokia’s 3G product and that a 35 percent market share is unlikely to ever be achieved,” writes Dr Richard Windsor of Nomura Holdings Inc.. “We think that 25 percent is more realistic, which is likely to result in a 15 percent share of the global infrastructure market in the long-term."

The W-CDMA air interface is part of the Universal Mobile Telecommunications Standard (UMTS), adopted as the European 3G standard. Used with existing GSM core networks, W-CDMA-compliant handsets and base stations can potentially increase wireless data transfer rates to a maximum of 2 Mbit/s.

— Justin Springham, Senior Editor, Europe, Unstrung

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