T-Mobile gives Nokia $3.5B award for 5G equipment

T-Mobile CTO Neville Ray at MWC (Mike Dano/FierceWireless)
T-Mobile CTO Neville Ray laid out the operator's 5G deployment plans earlier this year. (Mike Dano/FierceWireless)

T-Mobile put a dollar figure against its 5G plans, announcing that it will pay $3.5 billion to Nokia over the coming years to deploy 5G equipment.

The timing of the announcement is also key for Nokia, which just last week admitted to losing a “small number” of Verizon’s markets amid a bigger-than-expected slowdown in sales of its networking equipment.

"Nokia and T-Mobile will advance the large-scale deployment of 5G services throughout the United States,” said Ashish Chowdhary, Nokia’s chief customer operations officer, in a release from the companies. “This is a testament to our companies’ strong and productive working relationship, one which has produced several important technological milestones in recent months, and which now allows us to make 5G a commercial reality.”

T-Mobile said Nokia would deploy 600 MHz and 28 GHz millimeter wave equipment, and that it would use Nokia products including its AirScale radio platforms and cloud-native core, AirFrame hardware, CloudBand software, SON and 5G Acceleration Services.

For T-Mobile the announcement represents another step in the company’s 5G rollout process. T-Mobile initially announced plans to launch nationwide 5G services over its 600 MHz spectrum in 2017. The carrier’s plans came into sharper focus earlier this year when T-Mobile said it would switch on 5G technology in 30 cities by the end of 2018 – though T-Mobile stopped short of saying that it would offer commercial services at that time.

For Nokia, the transaction with T-Mobile serves to provide evidence for the company’s claim that it is winning a substantial share of the global wireless industry’s burgeoning 5G business. However, Reuters noted that its new $3.5 billion contract with T-Mobile isn’t a surprise since Nokia already accounted for its T-Mobile business in its projections, and therefore is not raising its financial expectations from what it discussed last week. In releasing its second quarter results, Nokia reported revenues and profits below most Wall Street expectations, but the company’s CEO promised that the equipment vendor would enjoy a stronger second half of 2018 thanks in part to growing sales of 5G gear.

Nokia isn’t the only equipment vendor keen to cash in on the move to 5G. Ericsson and other companies are hoping for major revenue bumps in the coming years from carriers’ launch of the technology. Indeed, according to a new forecast from ABI Research, the global RAN (Radio Access Network) base station equipment market will grow at a compound annual growth rate of 5% to roughly $26 billion in 2023. The firm attributed part of the rise to the rollout of 5G equipment alongside other technologies like LAA and massive MIMO.