Time is running out for 5G to save Nokia
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Time is running out for 5G to save Nokia
An asset sale or merger seems increasingly more likely
Bottom line: Nokia is reportedly exploring strategic options ranging from the sale of assets to mergers, sources familiar with the matter told Bloomberg. 5G could be the company's saving grace but it may be a case of "too little, too late" and at too great a cost.
The Finnish telecommunications company has hired advisers to help with deliberations which could also include shifting investments and making adjustments on its balance sheet, one person said.
A spokesperson for Nokia declined to comment when pinged by the publication.
Nokia is one of three major players in the race for carrier investments in next-gen mobile networks alongside Ericsson and Huawei. The latter firm isn't in the good graces of the US government due to accusations of spying but that won't affect its business in other regions.
Earlier this month, Attorney General William Barr said the US and its allies should considering investing in Nokia and Ericsson to counter China's potential dominance in the 5G sector.
"Putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power, or their staying power," Barr said as part of a speech during a think tank conference.
Bloomberg telecom analysts John Butler and Boyoung Kim believe Nokia has struggled to transition to a cost-competitive 5G hardware design which has impeded its ability to compete. "The 5G spending cycle is ramping up as commercial launches gain momentum, putting Nokia at risk of losing early awards," the duo added.
Masthead credit: Nokia building by JHVEPhoto. Cell tow