Nokia reported sluggish results in its networks business in its quarter results yesterday. But the carrier maintained its outlook for the full year 2018, largely due to what it said would be major 5G rollouts starting in the United States later this year and expanding to other areas next year.
“Our confidence is based on strong order intake and backlog in Q1; our end-to-end strategy is resonating with customers, resulting in strong cross-sell activity and a year-on-year doubling of the multi-business group pipeline; we have clear visibility to 5G deals for large-scale commercial rollouts in United States in the second half of the year; and are successfully executing our diversification strategy, with consistent double-digit profitable growth with enterprise and webscale customers,” Nokia CEO Rajeev Suri said in a statement on the company’s quarterly results.
Indeed, Nokia’s position in the U.S. market was underscored by its recent 5G agreements with Verizon and T-Mobile. T-Mobile was named specifically as one of the catalysts for Nokia’s positive 2018 outlook: “Among the deals signed was a commercial agreement with NTT DOCOMO, Japan’s biggest mobile operator, to supply 5G baseband products for deployment in a 5G mobile network by 2020. We also announced plans with T-Mobile for the rollout of a nationwide 5G multi-band network in the United States using Nokia’s commercial 5G solution. Nokia will begin building the network in the second quarter of 2018.”
Nokia’s position in the U.S. market likely is bolstered by the U.S. government’s continued push against Chinese vendors like ZTE and Huawei. Huawei specifically appears to have largely exited the U.S. market following a series of layoffs among its top U.S. leadership.
Overall, as Reuters noted, the operating profit at Nokia’s networks business fell 87% in its most recent quarter, though some of that decline was offset by continued successes in the company’s patent-licensing business.
Importantly, Nokia sees signs of improvement in the overall market for network equipment; the company raised its forecast on the sector’s performance from a decline of 2-4% to a narrower and slightly more positive decline of 1-3%
“Although there are some skeptics, we see 5G coming fast and coming big,” Suri told reporters, according to Reuters.