Nokia may be pulling itself out of the doldrums
The vendor signed a multi-billion dollar 5G deal and a data center extension with Microsoft Azure
Company shares are still down, despite the deals
Nokia ended the week on a high note after signing a multi-billion 5G extension deal with India’s Bharti Airtel and a five-year expansion of its deal to supply Microsoft Azure with data center switches and routers. Despite that good news, Nokia's shares are still down, probably because of the EJL Wireless report from Earl Lum that T-Mobile might drop Nokia as a radio access network (RAN) supplier.
While the company did not disclose the value of the Airtel deal, a source close to Fierce described it as “absolutely huge.”
Nokia has previously signed a 4G and 5G deal with Vodafone Idea in late September and split Reliance Jio’s largest standalone 5G rollout in the world with Ericsson in 2022 and 2023.
Nokia reported on its second quarter call in July this year that their mobile business was down 25% year-on-year, largely driven by an Indian 5G sales decline CEO Pekka Lundmark noted. Almost three quarters of Nokia’s massive revenue decline was attributable to India, he said. This is because Jio had completed their 5G rollout. The situation was no better in India in the third quarter. As a result, Nokia reported sales down 43% year-on-year in the region.
Now Nokia may see a second summer with its latest 5G extension deal with Airtel. Nokia said — in the release — that the Airtel deal is “in preparation for 5G-Advanced network evolution." This would mean that the operator is at some point planning to move away from its non-standalone (NSA) 4G core to a standalone 5G network. This would be the basis for a 5G-Advanced network and a 6G network after that in the 2030 timeframe or later.
In the meantime, Nokia will update Airtel’s network with equipment from its 5G AirScale line including base stations, baseband units and the latest generation of Massive MIMO (multiple input, multiple output) radios, powered by its ReefShark chip technology. Nokia’s ReefShark system-on-a-chip (SOC) is supplied by Broadcom, Intel and Marvel.
Nokia also said it will modernize Airtel's existing 4G network with multiband radios and baseband equipment, which can also support 5G.
We should start seeing the positive results of the latest Airtel deal in Nokia’s 2025 numbers and beyond. Nokia said that the contract is “multi-year” so it should receive revenues from the Airtel deal for some time to come.
Nokia’s data center days
As well as a major radio access network (RAN) deal, Nokia also signed a continuation of its data center deal. with Microsoft Azure this week. CEO Lundmark previously named data centers as the “number one” growth target for the Finnish company on its third quarter call this year.
The extension deal with the Microsoft hyperscaler should help to aim further Nokia’s sights on data center growth. The deal will see Nokia supply Azure with data center routers and switches for another five years.
The partnership will grow Nokia's footprint to over 30 countries and strengthen its role as a strategic supplier for Microsoft's worldwide cloud infrastructure. The vendor said that it will supply SONiC-based data center routers and switches in new locations and support Microsoft's migration from 100GE to 400GE connectivity within existing facilities. The new deployments will start in February next year.
“It does seem that Nokia is well positioned with Microsoft as the hyperscaler continues to evolve its data center to foster enterprise GenAI in the cloud,” neXt Curve executive analyst Leonard Lee told Fierce in an email. “This would entail the need for more high-performance interconnect not only between supercomputing clusters, but with more ‘traditional’ enterprise cloud infrastructure,” he added.
Of course, as Lee noted, this is still a highly competitive market with Ciena, Cisco and Juniper all in the mix. Still, Nokia’s data center dynamics appear more favorable going into 2025.
Will T-Mobile split with Nokia?
There’s always a fly in the ointment of course. EJL Wireless Research president Earl Lum predicted this week that T-Mobile will drop Nokia as a radio supplier after 10-plus years, preferring to rely solely on Ericsson. Lum broke the news that AT&T swapped out Ericsson as its radio supplier late last year.
T-Mobile rapidly replied to Fierce on Tuesday that it had “made no decision to end our working relationship with Nokia, and any reports in the media implying this are untrue." Analyst Lum, nonetheless, expects that we could hear about a T-Mobile/Ericsson deal by early December this year.
Nokia’s shares fell after Lum initially released his report and rose after the T-Mobile refutation. The shares are currently down — despite the massive Indian deal and Microsoft Azure re-up — at $4.13 as of close of markets on Thursday.