- With Ericsson selected as AT&T’s cloud RAN and Open RAN lead supplier, Nokia is left out in the cold
- Nokia hasn’t been ejected from AT&T’s network plans completely but the RAN rejection will hurt in multiple ways
- The Finnish vendor puts on a brave face but its share price slump tells the story
There’s no other way to dress this up – AT&T’s decision to exclude Nokia, one of its existing major radio access network (RAN) technology suppliers, from the upcoming cloud and Open RAN-enabled phase of its 5G network deployments is a massive blow to the Finnish vendor, a rebuff made worse by AT&T’s selection of Nokia’s arch rival Ericsson as its lead vendor partner.
The speculation that Nokia was heading for a fall at AT&T emerged late last week courtesy of a LinkedIn post by Earl Lum, president at EJL Wireless Research – the confirmation came sooner than anyone might have expected.
And AT&T isn’t just tinkering with Open RAN in an upstate backwater – it’s going to splash $14bn on multivendor systems (quite a bit of it from Ericsson) and plans to have 70% of its wireless network traffic flowing across open-capable platforms in three years’ time. Ericsson has rubbed salt into Nokia’s wounds by noting that the deal it has won to replace Nokia is the largest single contract by value in its history.
Gradually, starting next year and heading into late 2026, Nokia’s RAN business with AT&T is going to wither away. So how much is it worth? The vendor says that “AT&T accounted for 5% to 8% of mobile networks net sales year to date in 2023”, so taking the mid-point of that range and using the sales numbers from the first nine months of the year as a guide, AT&T looks likely to have spent in the region of €650m on Nokia mobile network technology so far this year, and this has been a year in which all of the US operators have massively scaled back their capital expenditures. Analyst estimates that Nokia would have been expecting mobile networks revenues of between €650m and €920m in 2025 look about right – but that was before AT&T’s bombshell.
Remember, though, that AT&T doesn’t buy only mobile networks equipment from Nokia – it currently spends about the same amount on broadband, optical, routing and other tech systems from Nokia as it does on RAN gear (we’ll come to this in a moment).
That’s not the only concern, though. The impact of AT&T’s decision isn’t limited to the direct financial hit to Nokia’s top and bottom line. That the US operator has decided to swap out one of its main RAN suppliers as it transitions to cloud and Open RAN-capable systems will have other telcos wondering if they should consider the same move. It’s hard to imagine that Tommi Uitto, the head of Nokia’s mobile networks division, is going to get much spare time in the coming weeks leading up to MWC24 in Barcelona as he engages in international damage limitation to his business.
Nokia is already on the defensive, worried that other telcos might regard it as less credible in the mobile networking sector, worried that its rivals beyond Ericsson will seek to take advantage and that investors will lose faith in the vendor’s ability to deal with the blow and come out stronger. Nokia’s share price is down 8.4% to €2.74 on the Helsinki exchange today, so we can already see the reaction of the financial community.
Hours after AT&T and Ericsson jointly announced the cloud/Open RAN plan, Nokia issued a statement to talk up its strength in the mobile networks sector, remind the industry how it has been building market share in recent years (following an early 5G RAN technology nightmare) and boast of being an Open RAN leader, a claim that will be called into question given AT&T’s decision.
The vendor’s CEO, Pekka Lundmark, noted: “Whilst the news from AT&T is disappointing, our mobile networks business has made significant progress in recent years, increasing our RAN market share and technology leadership. I firmly believe we have the right strategy to create value for our shareholders into the future with opportunities to gain share, diversify our business and improve our profitability. Mobile networks are critical to our global connected future and, as I have said before, the cloud computing and AI revolutions will not materialise without significant investments in networks that have vastly improved capabilities. Our customers can rest assured that we continue to invest in R&D and develop market-leading products for them.” Lundmark will face a lot of questions about how this decision has happened on his watch.
But while this is undoubtedly a painful blow, Nokia is not a one-trick pony relying on a single customer. Yes, AT&T is a big telco spending big money and every vendor wants a piece of that action. But Nokia has hundreds of mobile network tech customers and it also has a broad and impressive telecom infrastructure portfolio – its network infrastructure division (optical, broadband IP routing, submarine networks) generated almost 40% of total sales in the first nine months of this year, while the mobile networks business accounted for 44.4%. “Nokia remains a key partner for AT&T within both its network infrastructure, and cloud and network services businesses. AT&T will also continue to buy products, such as microwave radio links and femto solutions from mobile networks,” noted the vendor in its statement following the telco’s announcement.
It will take a long time for the dust to settle after AT&T’s announcement, especially as Nokia had already been replaced in Verizon’s RAN by Samsung Networks in 2020: Losing one major US mobile networks customer might be unlucky, but losing two (out of just three) is more than careless.
Nokia is hosting an Investor Progress Update event on Tuesday 12 December: There will be no prizes for guessing the major talking point that day.
- Ray Le Maistre, Editorial Director, TelecomTV
Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.