(NOK) Telefonica Chooses Nokia-Siemens Network for LTE

Nokia-Siemens Network (‘NSN’) – a 50-50 joint venture between Nokia Corporation (NOK) and Siemens AG (SI) has started deploying LTE (Long Term Evolution) for Movistar Chile, a subsidiary of Spanish Telecom giant Telefonica SA (TEF).

As part of the contract, NSN is rolling out a 4G LTE network in the 2.6 GHz frequency band for the Chilean subsidiary of Telefonica. NSN is implementing its Flexi Multiradio 10 base station, which will allow Movistar to upgrade its site to 2.6 GHz while reducing time space and power consumption, thereby reducing the capital expenditure for Telefonica.

NSN is also implementing Node B base station capacity expansion and Radio Network Controller expansion that necessarily control and manage the RAN (Radio Access Network). Additionally, to ensure a smooth roll out of the network, the contract also includes an upgrade of the Operational Support System (OSS) network optimization and care services.

In Jul 2012, Telefonica Chile along with local rival America Movil S.A.B. de C.V. (AMX) and Empresa Nacional de Telecomunicaciones acquired spectrum in the 2.6 GHz band and has to deploy nationwide network within 12 months of receiving spectrum. NSN, which is also deploying Movistar’s 3G network had also previously signed LTE contract with Telefonica’s Germany and United Kingdom subsidiaries.

The leading telecom equipment manufacturer NSN has been going through tough times for quite some time. Though the company has a strong GSM portfolio, it lacked severely on the CDMA front, which is the most dominant network used in the lucrative North American market.

To overcome this difficult situation, the company is concentrating on its core mobile broadband business and is reducing its operating costs by retrenching employees and selling non-core business units. Worldwide, telecom equipment manufacturers are witnessing steady demand for TD-LTE (Time Division) and FDD-LTE (Frequency Division Duplexing) based wireless broadband technologies among different carriers.

Various developing countries in Latin America are currently in the process of auctioning 4G spectrum to keep pace with Brazil and Mexico. We believe implementing LTE contract for such a big telecom company will strengthen NSN’s position in the Latin American market.

Currently, Nokia carries a Zacks Rank# 2 (Buy).

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