Nokia-China Telecom Forge Ahead With 4G Rollout In China

Finland-based Nokia (HE:NOKIA) Corporation (NYSE:NOK) and China Telecom Corp. Ltd. (NYSE:CHA) are expanding 4G network coverage in Chinese markets. The companies recently signed an agreement to forge ahead with their 4G rollout in 19 provinces of China, enabling China Telecom to expand coverage and capacity as well as the quality of service for subscribers. The agreement with Nokia paves the way toward the introduction of 5G technology and lays the foundation for China Telecom's launch of Voice over LTE (VoLTE) services in 2017.

The Deal

As per the deal, Nokia will deploy its 4G technology in 19 provinces of China – Shanghai, Jiangsu, Shandong, Zhejiang, Hunan, Hubei, Guangxi, Fujian, Jiangxi, Shaanxi, Heilongjiang, Hebei, Henan, Sichuan, Anhui, Liaoning, Guizhou, Xinjiang and Inner Mongolia. The deal also includes Nokia’s Flexi MultiRadio 10 base stations and services followed by project management, network design and installation. Hardware and software maintenance services will also be provided. Further, Nokia optimization experts will use the Nokia NetAct to improve the performance of the network for subscribers.

4G LTE expansion is expected to help China telecom fulfill growing subscriber demand with global 4G coverage as well as provide faster access to the Internet and online content in urban and suburban areas.

Similar Contract

In Jun 2016, Nokia entered in a one-year agreement with China Mobile Limited (NYSE:CHL) worth €1.36 billion ($1.5 billion). The deal says Nokia will help China Mobile transit to a flexible cloud network infrastructure and deliver mobile, fixed, IP routing, optical transport, customer experience management technologies and operational support, global services throughout the year. Presently, the Chinese market is dominated by China Mobile, China Telecom and China Unicom (Hong Kong) Limited (NYSE:CHU) .

The Bottom Line

By the end of Jun 2016, China Telecom had 207 million mobile subscribers out of which 90 million chose 4G. This marked an addition of over 31 million subscribers in the first half of 2016. The company also observed 4G network growth of over six times last year and hence expects it to account for more than 90% of mobile data traffic network by 2017.

Both Nokia and China Telecom currently have a Zacks Rank #3 (Hold).