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Nokia: New Street Research concerned by AT&T setback

( - Nokia: New Street Research concerned by AT&T setback
Analysts at New Street Research said on Tuesday that they were concerned about the repercussions of Nokia's loss of a major contract with the US telecoms operator AT&T.

AT&T said overnight that it had chosen Ericsson's Open Radio Access (Open RAN) technology to upgrade its mobile network in the US, in a deal worth up to $14bn over five years.

After losing Verizon to Samsung three years ago, Nokia is now losing AT&T to Ericsson", New Street Research reacted this morning.

This means that Ericsson is now the main equipment supplier to the three major US operators (T-Mobile, Verizon and AT&T) and that Nokia is now a minority player in this market, on a par with Samsung, the independent broker says.

According to its calculations, Ericsson is now the world leader in the RAN radio access equipment segment, with a market share of 28%, compared with just 15% for Nokia - a ratio of two to one.

The broker deduces that Nokia has lost almost 10% market share since 2016, when it controlled 24% of the sector, vs. 26% for Ericsson.

New Street Research fears that Nokia is now part of a kind of 'self-fulfilling prophecy' that could have particularly worrying indirect implications down the line.

Nokia's loss of the AT&T contract sends a negative signal to the sector as a whole, which could result in further contract losses worldwide over the coming years, it warns.

Investors seemed to share these concerns, as Nokia shares listed on the Paris stock exchange were down almost 8% at lunchtime on Tuesday.

New Street does not think this is an overreaction: Nokia is in a down cycle, risks losing more customers and will have to carry out a major restructuring in order to remain competitive, it concludes.

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