The promise of next-gen 5G communications networks got a major boost on Monday with the announcement of the first-ever deal in the sphere, as T-Mobile awarded Nokia a contract for $3.5 billion in network gear.
It’s been a long time in coming, and while the rivalry among telecoms giants has been heated—verbally—the specter of actually making it happen has lacked concrete action.
For Nokia, the deal will give investors a major boost of confidence that it will be able to pull out some more profitability this year.
Nokia shares closed up 1.85 percent Monday, while T-Mobile shares were up 0.35 percent at the close. But at the open Tuesday, Nokia wasn’t gaining any traction at all:
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The timing for Nokia couldn’t have been more urgent. Just last week it’s shares plunged when it told investors that customers aren’t ready to spend more for faster networks, and in fact are demanding price cuts, Bloomberg reported. And a Q2 earnings miss certainly didn’t help, with operating profits plunging 42 percent. But with the new deal in place, Nokia is eyeing a much better second of half—investors aren’t indicating, yet, that this has boosted confidence. Related: Housing Sales Are Slowing As Buyers Get Priced Out
For T-Mobile, it’s a major feather in the cap at a time when the war of words with competitors over who’s going to cross the 5G finish line first—and what that actually means—has reached fever pitch.
"We are all in on 5G," T-Mobile CTO Neville Ray said in a statement. "Every dollar we spend is a 5G dollar, and our agreement with Nokia underscores the kind of investment we're making to bring customers a mobile, nationwide 5G network."
The announcement follows an April agreement for T-Mobile to merge with Sprint in order to better compete against giants Verizon and AT&T. Now, T-Mobile is saying it will definitively be the first to deliver nationwide 5G services.
Everyone wants 5G, but operators have been hesitant to foot the bill to take them across the finish line. In other words, they’ve been looking at the 5G pictures in bits and pieces rather than as a full-scale commercial upgrade.
So is this truly the end of the hype cycle and the beginning of real 5G action?
Based on the terms of the deal, many seem to think so. Nokia will be supply T-Mobile with 5G hardware, software and services that will make it possible to deliver broad coverage on 600 megahertz spectrum, as well as ultra-high-speed capacity on 28 megahertz airwaves in dense urban areas, according to both companies.
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In February, T-Mobile promised it would build out 5G in 30 cities this year. AT&T is planning seven cities, and harping on T-Mobile for ignoring ‘mid-sized’ venues.
Still, as TechCrunch points out, a wider rollout of 5G won’t happen until 2020 at the earlier, and many are still struggling with how to even define 5G as anything more specific than ‘what comes after 4G’.
“One of the things 5G has the opportunity to do is lift mobile networks and become a general-purpose technology like electricity. It’s a platform for the next decade and beyond. Yes, there’s a race to get it into handsets by the end of 2019, but there’s also a longer-term vision. That’s where we might put the cart in front of the horse if we hype this too much,” Qualcomm’s Director of Technical Marketing, Matt Branda, told TechCrunch.
By Michael Scott for Safehaven.com
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