Nokia Bags $3.5B 5G Deal With T-Mobile US

Nokia has struck a $3.5 billion, multi-year agreement to build a "nationwide" 5G network for T-Mobile US in what represents its biggest 5G deal so far and one of the industry's largest 5G deals to date.

The Finnish equipment maker -- which champions its "end-to-end" capabilities over those of Swedish rival Ericsson AB (Nasdaq: ERIC) -- will provide a range of 5G products to the US operator, including radio platforms, core network technology and management systems.

Nokia Corp. (NYSE: NOK) is giving few other details away at this stage, including the exact duration of the contract and what percentage of the T-Mobile US Inc. network it covers, but said the financial impact would start to become apparent in its third-quarter results.

It will support the 600MHz frequencies that T-Mobile picked up in last year's auction as well as much higher 28GHz spectrum. The lower frequency bands are assumed to be much better for wide-area coverage and in-building services, while the 28GHz airwaves can handle much faster connections.

T-Mobile, which is trying to execute a merger with Sprint Corp. (NYSE: S), has previously talked up plans to build a "nationwide" 5G network by 2020 as it battles larger rivals AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) for mobile broadband leadership. It plans to spend between $4.9 billion and $5.3 billion in overall capital expenditure this year. (See 5G in the USA: Where We at With Mobile?, Is T-Mobile's 5G Plan Just a Pipe Dream? and T-Mobile & Sprint: Marriage made in hell.)

"We are all in on 5G," said Neville Ray, T-Mobile's chief technology officer, in a press release from Nokia. "Every dollar we spend is a 5G dollar, and our agreement with Nokia underscores the kind of investment we're making to bring customers a mobile, nationwide 5G network. And together with Sprint, we'll be able to do so much more."

The deal should help to address some investor concern about Nokia's 5G competitiveness after results for the second quarter showed a worrying decline in margins at the all-important networks business. (See Profits Crash at Nokia's Networks Biz.)

CEO Rajeev Suri, who has continued to present a bullish assessment of Nokia's 5G prospects in the second half of this year, blamed shrinkage in gross margins on customers funding 5G upgrades from older 4G budgets. Nokia spokespeople declined to comment when asked if the T-Mobile deal fell into this category.

However, Suri has brushed off suggestions Nokia is losing market share, hinting major deals were in the pipeline before today's deal with T-Mobile was announced.

— Iain Morris, International Editor, Light Reading

This is an edited version of a story that was originally published on Telco Transformation's sister site, Light Reading. To see the full story, click here.