In an effort to increase its market share in network deployment, Nokia Networks, a division of Finnish telecommunications equipment manufacturer Nokia Corporation (NOK), has decided to buy SAC Wireless, a U.S. based network installation services provider. However, financial terms of the deal have been kept under wraps.
Nokia believes that post acquisition, problems plaguing the company like site procurement, applying for certifications and sub-contracting, among others, will be solved. The company is expecting to finalize this deal in the third quarter of 2014. The company also believes that this deal will help drive its revenues higher.
SAC Wireless, with nearly 450 employees, has worked with leading telecom operators in the past. It has provided assistance in deploying network both in indoor and outdoor cells along with offering 4G LTE renovations and integration of distributed antennas systems.
In the first quarter of 2014, Nokia’s Nokia Solutions and Networks (NSN) segment generated $3.2 billion in revenues, down 17% year over year. This segment accounts for almost 90% of the company’s revenues, and is likely to receive a healthy boost from the SAC Wireless buyout, going forward.
We believe the acquisition of SAC Wireless will not only help Nokia enhance its product portfolio but also lead the company to win further orders. Recently, Nokia sealed a five-year deal with Telenor – a multinational telecommunications company – to provide the latter with radio access equipment and accomplished services. Per the deal, NSN will help Telenor in upgrading its 2G, 3G and 4G networks across Europe and Asia. Nokia’s security solution helps maintain end users' privacy apart from guarding the carrier’s network assets.
Nokia currently holds a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked stocks worth considering in this sector include Comtech Telecommunications Corp. (CMTL), Ubiquiti Networks, Inc. (UBNT) and InterDigital, Inc. (IDCC). Comtech and Ubiquiti Networks sport a Zacks Rank #1 (Strong Buy), while InterDigital carries a Zacks Rank #2 (Buy).
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