Nokia Lands Big Deals in China, UK
It has been a happy day for Finland's favorite equipment maker. Shortly after the UK's Openreach announced that Nokia would help it to build an all-fiber network serving 3 million homes and businesses, China Mobile was revealed to have signed a $1 billion deal with the Finnish vendor for a number of network technologies. (See Eurobites: Openreach Turns to Nokia, Huawei for 'Fibre First' Aid.)
Among other things, Nokia Corp. (NYSE: NOK) will provide radio access and core network systems for part of the Chinese operator's mobile network, as well as supportive IP routing and optical transport technologies. That all points to a significant role for Nokia as China Mobile Communications Corp. starts to plan for the rollout of a next-generation 5G network in the next couple of years.
The news comes several months after the world's biggest mobile operator confirmed it would start large-scale 5G trials later this year and start building a network based on the "standalone" (SA) version of 5G technology in 2020. (See China Mobile Confirms Aggressive 5G Standalone Plan.)
The recently standardized SA variant would allow an operator to use a 5G core network as well as the 5G new radio whose development was frozen in late 2017. With "non-standalone" 5G, operators plan to use the new radio system in conjunction with a 4G core network instead. (See 3GPP Done With 5G SA Specs. Now the Hard Work Begins.)
Building a nationwide 5G network in China is set to cost much more than $1 billion, but that figure is for a one-year "frame" deal that could lead to juicier contracts in future. The sum of $1 billion works out at more than a fifth of what Nokia made in the entire Asia-Pacific region last year.
Nokia also gets a chunk of fixed access business and the opportunity to flog some of its customer experience management software. In addition, its partnership with China Mobile could lead to the development of new tools, such as machine learning systems for monitoring and operating mobile networks.
With some industry observers warning that 5G networks will come with too many configurable parameters for humans to manage, Nokia was earlier this week revealed to have set up a 5G and artificial intelligence lab with China Mobile in the city of Hangzhou.
On the UK broadband side, Openreach today named the Finnish vendor as one of two suppliers that will help to build an all-fiber network serving 3 million premises. The other is China's Huawei.
While Huawei Technologies Co. Ltd. has already started deploying kit, Nokia is not expected to begin equipment installations until July next year.
The update suggests that broadband vendor Adtran Inc. (Nasdaq: ADTN) has missed out on all-fiber business despite its involvement in Openreach's Gfast project.
Under ageing plans, the BT Group plc (NYSE: BT; London: BTA) subsidiary aims to use Gfast, which boosts performance on older copper-based networks, to provide connections for about 10 million UK premises by 2025.
However, should regulatory conditions prove acceptable to BT, Openreach has said it will extend all-fiber networks to the same number of premises by the mid-2020s, casting doubt over its commitment to Gfast. (See Eurobites: Openreach Finally Puts 'Fibre First'.)
The all-fiber expansion could lead to a bigger role for Nokia while keeping the door open for the likes of Adtran.
Today's announcement is also welcome publicity for Huawei as a sign that major Western companies continue to maintain a strong relationship with the Chinese vendor.
In Australia, the US and -- to a lesser extent -- the UK, political hostility to Chinese technology vendors has been growing in recent months. Opponents accuse the Chinese of intellectual property infringements and claim that Huawei and smaller rival ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) remain a threat to national security because of their close links with the Chinese government. (See ZTE Labeled Security Risk by UK Government, Huawei Is Main Sponsor of Trips by Australian Politicians, Says Report and US Lifts Some Restrictions on ZTE.)
— Iain Morris, International Editor, Light Reading