A new loan secured by Nokia for its contract with Verizon lends credence to previous SDxCentral reporting about the vendor’s unstable footing with one of its flagship operator customers. 

Finnvera, a state-owned company that provides financing for Finnish exports, last week said it guaranteed a $500 million loan for Nokia’s equipment and services to be delivered to Verizon. The size and scope of the loan is one-third the size of a $1.5 billion loan Finnvera guaranteed for Nokia deliveries to Verizon in 2017, so the scope of this deal appears to be narrowed or perhaps just enough financing for a single year based on historical data.

“I’m not sure there’s a smoking gun there, but it’s certainly a piece of evidence,” Ryan Koontz, senior research analyst at Rosenblatt Securities, told SDxCentral. “It certainly doesn’t point to a big win at Verizon. It could mean [Nokia was] able to retain some share” of Verizon’s 5G radio access network contract mix, or a “kind of bridge” for all the gear Nokia would need to provide Verizon prior to transitioning to equipment from Samsung, he added.

Koontz last month said Verizon is preparing to end most of its business dealings with Nokia and give Samsung roughly half of its RAN contract, based on conversations with multiple, high-level sources. The change will also see Verizon go from three RAN vendors to two, including a complete removal of Nokia’s equipment dating back to its 4G LTE network footprint, according to Koontz.

Nokia is, for the time being, still doing business with Verizon, but the decline in financing reinforces Koontz assessment about the outlook. “If [Nokia was] on the verge of negotiating a massive 5G contract with Verizon, you’d have to believe that it would be a bigger number than that,” he said.

“You can’t really correlate the numbers on a truly proportional basis there, but it certainly does raise some questions. It raises more questions than answers,” Koontz added. 

“There’s no conclusion to be drawn quite yet,” he said. “At this point it’s a lot of speculation and just looking at risk and probabilities.”

Nokia said it is not a party to the financing agreement, describing it as an arrangement between Verizon and Deutsche Bank, one of two banks servicing the loan. "It shouldn't be assumed that a reduced financing amount means a reduced market share with the customer. There are other factors that come into play, such as Finnvera's capacity and Verizon's funding strategy," a Nokia spokesperson wrote in an email to SDxCentral.

Verizon did not respond to requests for comment. 

Finnvera declined to provide more detail on the scope or timeline for Nokia deliveries to Verizon, but added that the financing comes with a repayment period of 8.5 years, which is typical for its other financing guarantees.

“Finnvera has previously provided a guarantee relating to Nokia’s deliveries to Verizon in 2017. These two transactions are [the] only ones that Finnvera has been involved in,” relative to Nokia’s obligations to Verizon, Tiina Riippa, communications manager at Finnvera, wrote in response to questions. 

Koontz’ analysis is also further supported by recent comments and related activities underway at Xilinx, which recently inked a deal with Samsung to provide the vendor with its adaptive compute acceleration platform (ACAP) and beamforming capabilities in Samsung’s 5G New Radio (NR) gear. 

“One of our tier one [original equipment manufacturer] customers is expected to ramp RFSoC production this quarter for sub-6 GHz massive MIMO (multiple-input multiple-output) radio applications for North America deployment. And our design win pipeline for RFSoC continues to build,” Xilinx CEO Victor Peng said during the company’s July 30 earnings call, according to a Seeking Alpha transcript. 

“Our strategic engagement with Samsung continues to deepen as we collaborate on their second-generation 5G radio that includes beamforming using our 7-nanometer Versal ACAP,” Peng said.

Verizon’s 5G deployment program is in a temporary slow down phase because it intends to gain licenses to additional spectrum in the ongoing CBRS and forthcoming C-band auctions to complement its 5G network, according to Koontz. “They don’t want to go do a bunch of field work in the second half of this year and then go back and have to retouch those same towers in the first half of next year,” he said. 

The pause on 5G could also give Verizon some extra time to plan and begin deploying Samsung equipment, which Koontz expects to get underway later this year.

Meanwhile, Verizon is ready to deploy 5G nationwide in the coming months with a heavy assist from dynamic spectrum sharing (DSS), software that allows operators to use the same spectrum for 4G LTE and 5G. The operator recently completed an end-to-end data session on its standalone (SA) 5G core with network traffic slated to start hitting the new core before the end of 2020. Full commercialization of its SA 5G core won’t occur until 2021.

Verizon is also making moves to ensure it maintains a single RAN vendor per region, Koontz said, adding that operators typically assign an entire region to one vendor to reduce complexity. “I’ve heard there are some moving parts, but I haven’t heard, per se, that they’re ripping Nokia out anywhere,” he said.

It will likely take years for Verizon to replace Nokia’s equipment in its network and the operator may never publicly address that effort, according to Koontz.

Amid all this, Nokia has quickly updated its 5G RAN portfolio with higher performing and lower cost components, readied an aggressive open RAN portfolio, revealed network slicing software that will be available later this year, released software to upgrade older equipment to 5G, and earlier this month welcomed new CEO Pekka Lundmark who intends to challenge complacency and disrupt the status quo. 

“They’ve made solid progress on their 5G feature set. I still think they trail Ericsson by multiple quarters in terms of those features,” Koontz said, adding that recent changes have strengthened the vendor’s market position.

“The Nokia opportunity outside of Verizon, even in a worst case scenario, is pretty promising with Huawei really getting strangled” by mounting restrictions imposed by the U.S. government, he said. “I think they have ample opportunity in Europe and other more developed nations around the world.”

Editor's note: This story has been updated with comments from Nokia.