After missing out on market share in places like North America for recent 5G deals, Nokia’s CEO feels ready with product competitiveness to catch the next wave of 5G investments globally.
Speaking Monday at a Citi investor conference, Nokia’s chief executive Pekka Lundmark called out Europe, Latin America, Africa, and India as targets going forward.
While U.S. operators have been investing for upcoming mid-band deployments, Europe has seen slower 5G spending but is speeding up, he said.
At the end of this year and in 2022, parts of the world with limited 5G spending to this point (locations mentioned above) will gradually start making investment decisions.
“And we are so glad that now in this - in a way next wave of 5G, decisions will come, we will have fundamentally stronger product competitiveness than we had when some of the first decisions were made,” Lundmark said, according to a SeekingAlpha transcript.
Nokia launched its next-generation AirScale platform in June with Massive MIMO antenna, baseband, and remote radio units. Of competitive features, Lundmark called out more capacity, specifically support for 400 megahertz of instantaneous bandwidth (IBW). IBW represents bandwidth parameters that a radio can operate within, so for example, the full 3.4-3.8 GHz range. It also supports 200-megahertz occupied bandwidth (OBW), which he described as the sum of active bandwidths one radio can serve at the same time.
“What this means in practice from operators or customers point of view is that they get more with their bandwidth investment that they’ve made,” he said.
Nokia’s integrated baseband for 4G/5G allows operators to install the same baseband for older generation radios (from 2G-5G) and adds to cost efficiency for operators he said, as does a small footprint and reduced power consumption. The products are also O-RAN-ready.
Expecting to close the product gap with main competitors by the end of the year, Lundmark is “really, really optimistic about this chase in mobile networks at the moment,” he said.
Dell’Oro Group projects the total radio access network (RAN) market to grow 10%-15% in 2021, on track to reach cumulative global RAN investments of around $240 billion in the 2020-2025 forecast period.
Excluding China, Nokia expects to have around 25% market share for mobile networks after R&D investments and new product launches that were part of the work to course correct from early missteps on 5G gear.
In the U.S. Verizon awarded 5G contracts to Samsung and recently Ericsson – the latter worth around $8.3 billion. Lundmark also pointed to Japan and South Korea as further ahead on 5G investments.
Nokia also lost out on deals in China, but was able to regain some share as rival Ericsson faced issues stemming from political tensions between China and its home base of Sweden over Huawei.
“The technical requirements that Chinese customers have on 5G are extremely tough,” Lundmark said. “And we are proud to have been selected as a vendor, as in that particular case as the largest foreign supplier.”
Not just vendor swaps in Europe
As for the European market, some countries have required operators to swap out equipment from Huawei for another vendor.
Asked by a Citi analyst during the investor event about the dynamic of real demand in Europe and “swap out demand,” Lundmark pegged Nokia’s win rate for swaps (for “various reasons” implying not just Huawei replacement) at about 50%, but said that’s only part of the opportunity.
Looking at 5G coverage in Europe as a percentage of the population compared to the U.S. or South Korea, he said Europe is still far behind.
“So there is a lot of catch-up to be done,” he said. “And that’s of course, kind of completely new investment. It has nothing to do with any swaps.”
Using a different metric, results from Ookla Speedtest this week showed that European countries are outpacing the U.S. on speed (still behind South Korea and China) – but notably lagging in 5G availability (or the percentage of users with 5G-capable devices experiencing an active 5G connection).
According to Ookla, 5G availability during Q1-Q2 was 49.5% in the U.S., 40.4% in South Korea, and 21.1% in China. That compares to the U.K. at 10.2% and other European countries such as Spain (10.3%), France (6.7%), Germany (2.9%), and Italy (2.7%).
Outside of the expected increased investment in other regions next year, Lundmark also pointed to industrial 5G as a big new opportunity, though difficult to quantity.
“The 5G networks that will support automated manufacturing, robot control, logistics control, transportation, mining, you name it,” he said. “There is so much productivity improvement that can be gained with the next generation technology, connectivity investment in these industries, that we do believe that this will be driving some of these investments for many years to come.”