Nokia scored a $583 million loan from the European Investment Bank to boost research and development of 5G technology. The funding comes at a critical time for both the vendor and Europe’s fledgling 5G plans.
The R&D funding will be focused in Europe as part of the European Commission’s Juncker Plan. The Juncker Plan, which is also known as the EC’s Investment Plan for Europe, was initially announced in late 2014. It was designed to stimulate job growth and infrastructure investments.
Nokia can tap into the loan at any point over the next 18 months. Once accessed, the funds have an average maturity of approximately five years. For comparison, Nokia spent around $5 billion on R&D in 2017.
Analysts have noted that the continent was lagging behind North America and Asia in terms of developing 5G network deployment plans. Stéphane Téral, executive research director for mobile infrastructure and carrier economics at IHS Markit, recently noted that North America and Asia were set to begin 5G deployments later this year and into early 2019. However, he said European operators were “not planning to deploy 5G until 2021 or later.”
Nokia N.A. Questions
The funds also come at a critical time for Nokia. The vendor has signed 5G deals with a number of international operators, including China Mobile, NTT DoCoMo, Orange, Vodafone, Korea Telecom, SK Telecom, and Telefonica.
And, it has a robust presence in North America. That was highlighted by its recent $3.5 billion contract win with T-Mobile US.
Nokia CEO Rajeev Suri said those reports were “incorrect,” although he did admit that the vendor had lost contracts in a “small number” of Verizon markets. “That is true, and it is unfortunate,” Suri said of the losses. “Verizon is a longstanding customer, and we deeply value our relationship with them.”
Suri’s comments were part of the vendor’s reporting of second-quarter financial results that showed a year-over-year dip in revenues and earnings. The CEO did note that he expects an uptick in 5G work through the second half of this year. He also reiterated the company’s full-year guidance based on surging 5G interest in North America and China.
“We expect market conditions to improve further in the second half, particularly in Q4, Nokia’s seasonally strongest quarter, and as 5G accelerates significantly,” Suri noted.
Ericsson earlier this month also announced plans to boost its R&D spending on North America. Those plans include opening up a new software development center, hiring several hundred new workers, and producing 5G equipment stateside targeted at the North America region.
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