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Why The Worst May Be Over For Nokia
- May 12, 2018 -

Nokia has been posting relatively mixed results over the last few years, amid intense competition from Chinese rivals and weaker spending by wireless carriers, who have seen their deployments of 4G mobile broadband equipment peak off. However, the worst seems to behind the company for multiple reasons, which we outline below.

We have created an interactive dashboard analysis which outlines our expectations from Nokia over the next two years.

Networks Business Could See Upside As Carriers Bet On 5G

Nokia expects to see the market for telecom equipment recover, as commercial roll-outs of 5G networks begin in North America later this year, with other regions including South Korea, China, Japan and the Middle East commencing build outs from 2019. While analysts remain skeptical if 5G spending will reach levels seen at the peak of the 4G deployments in 2015, as the use cases and business cases for the technology still need to be ironed out, the investment cycle will nevertheless help Nokia’s networking division return to growth over the next two years.

Separately, Nokia could also see an upside from the headwinds faced by Chinese rival ZTE, after the U.S. Department of Commerce blocked its access to American-made components for seven years, amid alleged violations of the Iran sanctions. The disruption of ZTE’s supply chain could cost it a significant amount of business, as it could take a lot of time to identify alternative suppliers for components and re-design its products. ZTE had been posting solid growth in markets including Europe and the Americas, hurting contract pricing and growth for its European rivals, and its current headwinds could benefit Nokia.