It was nine months ago when reports surfaced that Siemens and Nokia were looking for a way out of their joint venture. Nokia Siemens Networks floundered throughout 2009, reporting falling revenues and operating losses. It was losing ground to competitors such as Ericsson, which beat out NSN for Nortel's LTE and CDMA assets, and low-cost vendor Huawei.
Fast forward to this week: NSN announced an agreement to purchase most of Motorola's (NYSE:MOT) wireless network infrastructure business for $1.2 billion, an acquisition that was not done for financial reasons but to primarily expand NSN's presence in North America and Japan (see related article). And it won a seven-year, $7 billion deal with Harbinger, now known as LightSquared, to build and manage its nationwide wholesale LTE network. The vendor now is a part of 15 LTE commercial contracts worldwide.
When the vendor reports its second-quarter earnings today, NSN is expected to announce higher revenue with key growth areas revolving around LTE and managed services.
Sue Spradley, head of NSN's North America region, told FierceBroadbandWireless that once the difficult integration of Siemens and Nokia was complete, NSN CEO Rajeev Suri focused on growth and sustainable profitability. Cost-cutting measures have paid off to a point where NSN is now profitable on a lower amount of revenues, she said.
NSN has been working hard for some time to crack the North American market, in particular the U.S. market since it has a number of contracts in Canada. NSN is supplying the IMS piece for Verizon's (NYSE:VZ) LTE network, but it's big break has come with the LightSquared deal, which is unique in the fact that the operator chose just one vendor.
"The LightSquared deal has complemented [the Motorola acquisition], giving us a much bigger scale since it's the largest national LTE network," Spradley said. "With managed services and outsourcing, the deal takes us to a new level, and quickly we become No. 3 in the market."
LightSquared said its network will consist of around 40,000 cellular base stations and will cover 92 percent of the U.S. population by 2015. As a condition of its deal to acquire SkyTerra, Harbinger must cover at least 100 million POPs in the U.S. by the end of 2012, 145 million POPs by the end of 2013 and 260 million POPs by the end of 2015.
Certainly NSN has a lot of work cut out for it during the next several months. The vendor has to plan future roadmaps, such as deciding how it will position Motorola's WiMAX business and integrate CDMA technology; integrate some 7,500 Motorola employees; swiftly build out a nationwide LTE network on its own and create a managed services plan for LightSquared's LTE network that will sustain the company's wholesale strategy, to name a few.
Communicating that future roadmap will be key, especially on the TD-LTE side, noted Current Analysis' Peter Jarich in a recent research note. He said a potentially problematic area of product conflict might come on the TD-LTE front. Motorola released a single radio access network enabling WiMAX operator to either migrate to 802.16m or TD-LTE. If NSN opts to continue moving ahead with its Flexi platform, it will lose the ability to support 802.16m. Moreover, Jarich is advising that CDMA operators looking to transition to LTE demand NSN incorporate CDMA into its Flexi platform.--Lynnette