Nokia has already secured 5G contracts with Bharti Airtel and Reliance Jio Infocomm in India
Finnish vendor Nokia believes that the low margins it is seeing in the Indian telecom infrastructure market will be offset by a larger scale compared to other markets, the company’s CEO Pekka Lundmark said during a conference call with investors.
“It is well-known fact that the Indian market is highly competitive, and that will put pressure on gross margin. But on the other hand, the scale effects will be so big that we believe that entering this business will actually support our path towards our group operating margin targets,” Lundmark said.
The executive highlighted that Nokia has secured 5G contracts with local operators Bharti Airtel and Reliance Jio Infocomm in the third quarter of the year. “With Bharti Airtel we’ve been awarded a 45% share of their planned 5G network, continuing our long-standing partnership. We also announced a deal with Reliance Jio, where we will be a major supplier for their planned 5G network deployments.”
Although Nokia is not specifying its market share for Reliance Jio’s 5G network, Lundmark said: “It is a meaningful market share. It’s not a small piece. So, this represents a significant volume potential for us.”
Business outlook in China
In related news, Lundmark said that he was skeptical about the business outlook for Nokia in the Chinese market next year.
“When it comes to our market position in China, I am a bit skeptical as to a possibility that there would be any big positive news coming. I mean, we continue to fight on the market. It is, of course, a very large market. But the reality is that market shares that are available for non-Chinese players in China have been coming down for some years already. And it’s a little bit hard to see in today’s geopolitical environment how that could change in a big way,” the executive said. The executive noted that Nokia’s Greater China region, which includes Taiwan, represented around 6% or the vendor’s business, which shows a sharp decline compared to previous years.
Commenting on the potential impact of the sanctions imposed by the U.S. government to a number of Chinese vendors and carriers, the executive said that it would be difficult to measure the real impact of such decision in the market. “We don’t believe that the U.S. restrictions would have any direct effects on us. But this is, of course, something that needs to be followed on a continuous basis because the situation with the restrictions and especially then the enforcement and implementation, is a matter that is work in progress,” he added.
“But it’s very clear that the trade restrictions are getting tougher and tougher, and they are adding new things into it. It’s not only anymore about semiconductors. It’s also about design tools, and it’s about software.. So that could then, of course, have potentially quite a big indirect effect on the market dynamics because it may change the relative competitive positions of different players in the market depending on who has and who has not access to the latest tools and the latest chipset generations,” Lundmark said.
