Nokia Siemens looses to China Gaint - Analyst Blog

Nokia Siemens Networks (NSN), a 50-50 joint venture between Nokia Corp. (NOK) and Siemens AG (SI) recently suffered a huge setback in the Nordic region. TeliaSonera AB, the pioneer telecom carrier in the world to install next-generation (4G) Long Term Evolution (LTE) wireless networks, has decided to replace all 2G and 3G network equipments it installed through Nokia Siemens Network in Norway with new infrastructures from LM Ericsson AB (ERIC) and Huawei Technologies Co. Ltd.

The recent decision of TeliaSonera is quite surprising since in January 2010, the company had chosen Nokia Siemens Networks over Huawei to deploy nationwide LTE network in Sweden and Finland. After a pathetic 2009, Nokia Siemens Networks had taken several steps to improve its financials. The company  has been using competitive bid prices for  winning contracts. This could be the primary reason for winning the TeliaSonera contract win in January 2010.

We do not have any idea whether the recent reverse decision of TeliaSonera resulted from a competitive bidding or is it purely a technical issue. Whatever may be the reason, it once again became prominent that the two Chinese behemoths viz. Huawei and ZTE have emerged as a serious threat to the well established global network infrastructure solution providers like Nokia Siemens Network. The high-margin LTE contracts are extremely lucrative to the wireless equipment manufacturers. Management of Nokia Siemens Network has already predicted that the company's loss of global market share will be more than what was earlier estimated.

Recently, Nokia Siemens Networks suffered another setback when the company announced that its proposed acquisition of the majority wireless infrastructure business from Motorola will be completed in the first quarter of 2011 instead of late 2010. The company received regulatory approval from the U.S., European Union, Brazil, Japan, Russia, South Africa, Taiwan, and Turkey. However, China is yet to give clearance for this merger.

 
ERICSSON LM ADR (ERIC): Free Stock Analysis Report
 
NOKIA CP-ADR A (NOK): Free Stock Analysis Report
 
SIEMENS AG-ADR (SI): Free Stock Analysis Report
 
Zacks Investment Research