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Nokia enters into a $1B agreement to supply technology to China Mobile

China Mobile has 902 million subscribers, more than Verizon and AT&T combined

Financial trends and news by Steven Loeb
July 11, 2018
Short URL: http://vator.tv/n/4bcb

After Nokia was acquired by Microsoft for over $7 billion in 2013, the company, once the leading vendor in the mobile phone space, took its focus off of what it was best at, partially because of the failure of Microsoft's own Windows Phone division. Instead, the company seemed more focused on the Internet of Things and digital health, thanks to acquisitions like Withings. 

Starting in 2016, though, Microsoft began licensing off the Nokia brand and intellectual property, allowing the company to return to the space in which it once flourished. It labeled its deal with Oy (HMD), to license to create Nokia-branded devices, as a "return to the mobile phone and tablet markets on a global basis."

Now the company, which is making a comeback around the world, has just struck a major deal that will give it a foothold in one of the world's fastest growing technology ecosystems.

On Tuesday, Nokia announced that it signed a one-year frame agreement with China Mobile that is valued at up to EUR 1 billion, or $1.17 billion.

The deal involves Nokia providing China Mobile with end-to-end technology solutions to "enable a next-generation network for the age of the cloud and machine communications." Nokia is also going to be giving China Mobile elements of its mobile radio access and core portfolio, along with fixed access, IP routing and optical transport and customer experience management.

In other words, Nokia is going to be giving China Mobile the technology it needs to make its phones fast and reliable, all for a very hefty sum. 

This deal comes just days after Nokia and China Mobile teamed up to set up a joint laboratory "investigate the potential of artificial intelligence (AI) and machine learning to optimize future networks and enable the delivery of new Edge Cloud and 5G services."

Nokia in China

Teaming up with China Mobile could be a boon for Nokia as it positions itself in the Chinese mobile ecosystem, which is massive, yet slowing down. 

In the first quarter of this year, Nokia saw 11 percent of its sales come from the Greater China region and now it is establishing a relationship with China Mobile, which currently has 902 million subscribers. That is more subscribers than Verizon, with 151.48 million, and AT&T, with roughly 141 million, combined. 

"This is a highly significant agreement with our longstanding partner that consolidates Nokia's position as a leading provider of next-generation technologies and services in China. We are committed to delivering industry-leading, end-to-end capabilities that will allow operators to dramatically increase performance, which will introduce new possibilities for networks of the future," Mike Wang, President of Nokia Shanghai Bell, said in a statement. 

At the same time, if Nokia is looking to China as the key to its resurgence as a dominant global player, this may not be the best time for that, as the country is seeing sales shrink due to over saturation.

According to the IDC Quarterly Mobile Phone Tracker, the China smartphone market declined 15.7 percent year-over-year in the fourth quarter of 2017, and and 4.9 percent for the full year 2017.

VatorNews reached out to Nokia for further comment on this deal but the company was unavailable at this time. 


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