Connect with us

5G

Research firm concludes American takeover of Nokia ideal solution to the US 5G problem

Forbes covered an interesting analysis of research company Edge about the 5G situation in the US. The US administration is worried that the USA isn’t positioned well enough in the 5G space, that is dominated by Chinese players like Huawei and ZTE, and European companies Nokia and Ericsson.

US president Donald Trump signed the Secure 5G and Beyond Act of 2020 that requires him to come up with a solution for American 5G problem by 20th September 2020. The problem is that the US doesn’t have a 5G infrastructure company, thus the US is relying on European Nokia and Ericsson (as well as Samsung), while most of the world also uses Huawei’s and ZTE’s services. In fact, the combined 5G RAN (Radio Access Network) market share of Huawei and ZTE is 40%, and the USA is troubled because Chinese companies have a close relationship to the Chinese government, that might use Huawei and ZTE to influence other countries, including US allies.

The administration already started stirring up some ideas to counter the Chinese influence in the 5G space and they included credit lines to Nokia and Ericsson, acquiring Nokia and Ericsson and starting a new 5G US company in partnership with big US technology companies and operators. The researchers at Edge, as covered by Forbes, concluded that Nokia might be an ideal takeover candidate and that the company should fit well in business model of some big US companies.

In the debate between taking a controlling stake in Ericsson or Nokia, the Edge reasons that Nokia is a better candidate because Ericsson has more domestic ownership (that will ask a higher premium to sell) and market metrics show Nokia underperforming. The recent rumors about Nokia fighting a hostile takeover also make an argument that the company might be a better candidate. Also, Nokia has an end-to-end portfolio, that includes fixed and optical networks and some strategic business like submarine cables, meaning a takeover will bring more value than just 5G.

Regarding how American influence can be exercised on Nokia, the article mentions purchasing a controlling stake by American funds or acquisition by American companies in the internet business. One candidate is Cisco with a market cap of 175 billion dollars, which strategic goals include a) entering new markets, b) accelerating its market participation, and c) expand its market position, and a acquisition of Nokia fits all of them. In February 2020, Cisco CEO denied the rumors of the company acquiring Nokia.

The second mentioned candidate is Qualcomm, that is more focused on integrated circuits than network infrastructure. Edge argues that Qualcomm is under pressure in the “SoC” department with more and more companies coming up with their own solutions, therefore acquiring Nokia will allow Qualcomm to diversify its business.

The article also describes the role of 5G in different life aspects and industries. It is a bit lengthy, but really informative and I recommend checking it out here.

This year we heard a lot of rumors and speculation about changes that might happen to Nokia, so it is a good reminder that nothing happened yet, but the volume of news and speculation makes me believe that something is going on behind the scenes. Only time will tell what.

―Nokiamob

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!