Nokia Inks 5G Pact With BT Group, Expansion Plans On Track

Finland-based Nokia (HE:NOKIA) Corporation (NYSE:NOK) is forging ahead with its 5G expansion plans. Nokia recently entered a research collaboration agreement with BT Group plc (NYSE:BT) , world’s leading communications service company headquartered in the U.K. The companies will work toward developing 5G technologies, creating 5G Proof of Concept (PoC) trials and developing technology standards and equipment.

In Feb 2015, Orange (NYSE:ORAN) had entered into a definitive agreement with BT Group to divest its U.K. wireless business EE which it jointly controls with Deutsche Telekom AG (DE:DTEGn).

Details of the Deal

The main purpose of the trial is to look into the technology enablers for 5G including mmWave radio and convergence, potential commercial services like ultrafast mobile broadband, mission-critical services and the Internet of Things (IoT). Initially, Nokia has started conducting trials of its latest 5G-ready radio equipment at the BT Labs at Adastral Park, Suffolk in the U.K., using Nokia’s AirScale radio access. Nevertheless, this association is subject to the existing relationship through which Nokia supplies BT Group’s 21C core routing platform and both the BT/EE subscriber register infrastructure and part of the EE Radio Access Network.

Benefits of 5G

5G or 5th generation mobile networks or 5th generation wireless systems is the next major phase of mobile telecommunications standards after the 4G/IMT standards. 5G is expected to deliver mobile broadband speeds of up to 1 Gbps and latency in the range of one millisecond. It thus enables simultaneous streaming of data like 360-degree video streaming and mobile remote control. Nokia and BT Group presume that 5G’s ability lies in terms of flexibility and usability of mobile networks as per the different needs of customers. This requires lower latency to support critical communications or greater power efficiency and higher bandwidth usage for various applications. The new flexibility will be used to support new business and consumer services based on IoT, including connected cars, smart cities and remote health monitoring applications.

The Bottom Line

5G is a revolution in the field of communications. 5G has appealed to the telecom industry and hence similar partnerships are evolving. Nonetheless, there is a lot of discussion on the technology as we know with every new G (generation) entering the wireless technology world, the demand, popularity and excitement increases among users. Although, 5G technology has just been introduced to the market, it is expected that such alliances should lead to higher adoption of the technology later this year.

However, Nokia continues to face tough competition from the likes of LM Ericsson (NASDAQ:ERIC) and Huwain Technologies Co. Ltd.

Both Nokia and BT Group currently have a Zacks Rank #3 (Hold).