NSN: margins to be boosted by Middle East and Europe

Nokia Siemens Networks (NSN) is expected to report much improved profit margin for the current quarter helped by growing demand from Middle East and European operators. However, orders from operators in Southern Europe seem likely to be delayed or cancelled as these countries implement harsh monetary restrictions.

Reports carried by European newspapers claim that NSN is aiming for an operating profit margin of up to 3 per cent on revenue of between €3.1 and €3.4 billion, helped largely by an improving order book from the Middle East.

Jorg Erlemeier, head of NSN's Middle East and Africa region, said he expected regional sales to bounce back to single-digit growth after the recession of last year. While the company does not release regional revenue details, he added that NSN's growth was being driven by Middle Eastern mobile operators spending to keep pace with the rise in demand for networks access.

"In the Middle East, you have extremely mature mobile markets, especially when it comes to mobile penetration," said Erlemeier. But the exec indicated that broadband usage remained low because of the difficulty in reaching consumer households.

"The UAE has been resilient when it comes to telecoms spend, which is not surprising given its mobile broadband rollout and its fibre-to-the-home projects," said Erlemeier.

Commenting on Europe, NSN manager Hermann Rodler told Euro am Sonntag that "the development in new orders and revenue in Western Europe in the current quarter have so far been better than expected."

However, Rodler warned that operators which were partly owned by indebted euro zone governments would likely have difficulty refinancing their projects due to a knock-on effect to their creditworthiness. The most likely countries immediately affected by these poor debt ratings include Greece and some regions in Spain.

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