T-Mobile and Nokia have announced a $3.5 billion 5G deal in the US.
Nokia will provide T-Mobile with its complete 5G technology, software, and services portfolio, helping the mobile services provider to bring a national 5G network to market for its customers.
Nokia will help build T-Mobile’s network in both the 600 MHz and 28 GHz millimetre wave segments of the spectrum, in accordance with the 3GPP’s 5G New Radio (NR) standards.
“We are all in on 5G,” said Neville Ray, chief technology officer at T-Mobile. “Every dollar we spend is a 5G dollar, and our agreement with Nokia underscores the kind of investment we’re making.”
The deal – one of the largest to date in 5G – comes at a crucial time for both parties. T-Mobile’s $26.5 billion merger with Sprint has still not been approved by regulators, with the ability to scale 5G offerings central to T-Mobile’s arguments in favour of the deal.
T-Mobile aims to take the fight to the US’ largest wireless carriers, Verizon and AT&T, from a consolidated position at number three in the market, with a promise to build out a large-scale 5G network and compete on quality and depth. The Nokia deal stands it in good stead.
The powers behind the throne of the Spring mega-deal are Deutsche Telekom, which owns 66 percent of the existing T-Mobile in the US, and Japanese communications and robotics group SoftBank, which owns a majority stake in Sprint. (In the UK, T-Mobile is part of BT-owned EE).
Deutsche Telekom wants to reduce its exposure to both T-Mobile and the US market, and the merger will leave it with a reduced 20 percent stake in the debt-laden firm.
SoftBank’s billionaire CEO Masayoshi Son, who will serve on the board of the new T-Mobile, will be waiting in the wings to pick up Deutsche Telekom’s remaining stake, should the company decide to sell. Son’s intention is to be a major player in the US telecoms sector, where he has made no secret of his desire to take on Verizon and AT&T.
Meanwhile, Nokia announced disappointing Q2 financial results last week: revenues of €5.3 billion ($6.2 billion), down six percent year on year. Operating profits fell by 43 percent year on year to €334 million($392 million).
Nokia’s guidance for the rest of the year – market headwinds reducing, especially in North America – included the T-Mobile deal, said the company yesterday.
Among its many holdings, Nokia owns US communications research facility, Bell Labs.
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The ongoing US trade war with China gives Nokia an advantage over Huawei and ZTE, while the T-Mobile tie-up gives it an edge over rival Ericsson in the US. Earlier this month, Nokia signed a deal with China Mobile worth up to €1 billion to deliver fixed and mobile networking technologies.
The market context is also heating up as much as the 5G space itself. T-Mobile has accused rivals AT&T and Verizon of launching “fake 5G” packages, while Huawei recently suggested that the race for 5G is largely a marketing hook and the technology will add little real value to consumers.
The comments can be interpreted as an attempt to belittle US progress in 5G deployments.