With no more money from its corporate parents forthcoming and few remaining businesses to sell, Nokia Siemens Networks has gone to European and U.S. banks for the funding it needs to restructure and survive.
According to reports from Reuters and Bloomberg, the telecom network equipment maker has secured €1.2 billion ($1.6 billion) in loans, which is about €200 million less than it was seeking. The question now is whether NSN can successfully use that lifeline to re-establish itself in the telecom market as a newly-streamlined mobile broadband competitor or if it is just forestalling further decline.
Since Nokia and Siemens merged their telecom infrastructure businesses in 2007, the venture has struggled against not only its traditional competitors Ericsson and Alcatel-Lucent but also Chinese upstarts like Huawei and ZTE that have emerged as telecom powerhouses in their own right. Last year, its corporate parents tried to sell the venture, but failed to find a buyer and were forced pony up another $1 billion for their prodigal son before cutting the apron strings completely. That led to fire sale on NSN’s business units, including the WiMAX group it acquired from Motorola, its microwave backhaul arm and the entirety of its wireline business. Those sales bought it some time, but not before it was forced to cut 23 percent of its remaining workforce.
NSN’s goal is to reinvent itself as a mobile broadband specialist, which has had mixed results so far. The vendor has won some key LTE contracts, most notably with NTT DoCoMo, but it’s become practically a non-factor in the hottest 4G market in the world right now: North America. In 2009, the U.S. got tired of lagging in the world’s mobile technology race and decided to take the lead on LTE. The result has been a huge surge in network construction domestically.
Unfortunately for NSN, North America has always been its weakest regional market. It watched Verizon Wireless and AT&Ts’ big LTE radio contracts go to Ericsson and Alcatel-Lucent and stood by as new entrants like Samsung snagged big pieces Sprint and Clearwires’ 4G networks. Ever U.S. operator large and small is building out some kind of mobile broadband network, but NSN can only claim two portions of that huge market pie: T-Mobile’s HSPA+ network upgrade and a relatively small contract with Verizon to build its new LTE service delivery core. In Canada, NSN is supplying gear for Bell Mobility’s ongoing LTE rollout.
As LTE launches expand from the U.S. to Europe and Asia – traditionally much stronger regions for the vendor — NSN prospects are improving. In addition to DoCoMo, NSN has won a key LTE contract with South Korea’s KT, and in Europe it is supplying Telefonica the infrastructure for its O2 LTE rollout in Germany.