Nokia, T-Mobile team up for massive 5G deal
Huawei among top R&D spenders to bolster own network technology
T-Mobile US named Nokia to supply it with $3.5 billion in next-generation 5G network equipment, marking the world’s largest 5G deal so far and concrete evidence of a new wireless upgrade cycle taking root.
No.3 US mobile carrier T-Mobile – which in April agreed to a merger with Sprint to create a more formidable rival to US telecom giants Verizon and AT&T – said the multiyear supply deal with Nokia will deliver the first nationwide 5G services.
Terms of the deal call for Nokia to supply a range of 5G hardware, software and services that will allow T-Mobile to capitalize on licensed airwave to deliver broad coverage on 600 megahertz spectrum and ultra high-speed capacity on 28 gigahertz airwaves in densely trafficked urban areas, the companies said.
The T-Mobile award is critical to Finland’s Nokia, whose results have been battered by years of slowing demand for existing 4G networks and mounting investor doubts over whether 5G contracts can begin to boost profitability later this year.
Nokia will supply T-Mobile with its AirScale radio access platform along with cloud-connected hardware, software and acceleration services, the company said in a statement.
The network equipment business, which is led by three big players – China’s Huawei, Nokia and Sweden’s Ericsson – has struggled with flagging growth since the current generation of 4G mobile equipment peaked in 2015.
Among them, Huawei, the world’s second-largest smartphone maker, said on Tuesday revenue rose to 325.7 billion yuan ($47.7 billion) in the first half of 2018 due to strong performances across its businesses including smartphones, telecom equipment and IT infrastructure services. It maintained the pace of growth from the same period last year.
The company also vowed to increase its annual spending on research and development (R&D) to between $15 billion and $20 billion, as it races to become a global leader in 5G technology.
Huawei, which previously pledged to invest $10 billion to $20 billion annually on R&D, spent 89.7 billion yuan ($13.23 billion) on it in 2017, accounting for 14.9 percent of its total revenue.
The company is among the world’s top R&D spenders. Amazon and Alphabet, the two biggest spenders on R&D in the US, spent $22.6 billion and $16.6 billion, respectively, in 2017, according to financial data company Factset.
About 80,000 of its employees, or 45 percent of its total workforce, are engaged in R&D, Huawei said on its website.
In the beginning of July, the Portuguese unit of telecoms firm Altice, the country’s largest operator, began working with Huawei to make Portugal a leader within Europe in the development and roll-out of next-generation 5G networks.
“I believe that the Portuguese market will be one of the first globally to be able to use this (5G) technology,” said Alexandre Fonseca, CEO of Altice Portugal, after the first demonstration of the technology on Wednesday using a prototype Huawei router with a top speed of 1.5 gigabytes per second.
Fonseca expects the first commercial devices to crop up in Portugal in 2019 or 2020, although regular users are unlikely to have access to the technology before 2021 or 2022, “because various questions need answers, such as investment versus profitability of the business.”
5G networks promise to deliver faster speeds for mobile devices users and make networks more responsive and reliable for the eventual devel- opment of new industrial automation, medical monitoring, driverless vehicles as well as other business applications.
However, cash-strapped telecom operators around the world have been gun-shy over committing to commercial upgrades of existing networks, with many seeing 5G technology simply as a way to deliver incremental capacity increases instead of markedly advanced new features.
Huawei has said that it would charge fair and reasonable (FRAND) rates for its 5G intellectual property to facilitate the adoption of the new technology, which is expected to come into large-scale commercial use in 2020.