Nokia’s departing CEO Rajeev Suri has defended the vendor’s recent contract record, indicating that lucrative deals are in the pipeline even though it has missed out on some major wins.
One example is China Mobile’s recent issue of 5G tenders, in which Nokia lost out to the operator’s compatriots Huawei and ZTE. China Unicom and China Telecom’s tender for their joint SA 5G network seemingly echoed this preference – although to rub salt in the wound for Nokia, the partners also awarded contracts to Swedish vendor Ericsson.
Despite these setbacks, Suri struck an upbeat tone during Nokia’s Q1 earnings call, saying he remained “quite optimistic” that China Unicom would award Nokia a 5G core contract. Nokia has not yet received any official confirmation of such a contract.
Suri noted that Nokia was targeting the international market rather than tailoring its 5G RAN solutions to China’s needs, reportedly telling media that “a return to 5G radio at some point in the future is not out of the question but our approach has consistently been prudent.”
However, he added that Nokia would “remain a meaningful player in China” courtesy of its large installed 4G base. Additionally, the vendor is pursuing enterprise 5G in the market with opportunities including fixed, IP routing and optical networks.
Both the China Mobile and Unicom-Telecom tenders were announced after the close of Q1. During this quarter, Nokia saw its net sales in China fall 29% year-on-year, accounting for 6% of its global sales for the period as opposed to 9% for the same quarter in 2019.
Nonetheless, Suri noted that Nokia had signed 70 commercial 5G deals ahead of the close of Q1, with its equipment used in 21 live networks. Excluding China, its share of the 4G and 5G radio market is likely to match its 2019 share of 27%. He added: “pursuing market share in China presents significant profitability challenges and the region has some unique market dynamics”.