Telecom Lead Europe: Nokia Siemens Networks has posted 5 percent drop in Q1 2013 revenue to €2.804 billion from €2.947 billion in Q1 2012.
Its special focus on mobile broadband and global services did not help Nokia Siemens to show revenue growth in the first quarter.
Nokia Siemens says the decrease in net sales was primarily due to earlier divestments of businesses. On top of this, Nokia Siemens Networks exited certain customer contracts.
Excluding these two factors, Nokia Siemens Networks’ net sales in the first quarter 2013 declined by approximately 1 percent as lower net sales of global services were almost entirely offset by higher net sales in mobile broadband.
Lower global services sales impacted revenue growth.
The company can cheer as mobile broadband represented approximately 44 percent of Nokia Siemens net sales in Q1 2013, compared to approximately 41 percent in Q1 2012 and approximately 45 percent in Q4 2012.
Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research, recently, said: “As we predicted, 2012 was the LTE year in Japan following a year marked by 3G reconstruction efforts after the great earthquake and tsunami. LTE revenue in Japan soared 188 percent and will keep its momentum this year, driven by accelerated rollouts and the increasing willingness of service providers to shut down 3G.”
Japan’s total mobile infrastructure market surged 78 percent in 2012, to $3.9 billion, owing to a strong LTE push fueled by NTT Docomo, KDDI, and SoftBank Mobile. 3G declined 11 percent in Japan in 2012. 100 percent of Japan’s mobile subscribers are on 3G networks. Nokia Siemens Networks is #1 in LTE infrastructure revenue market share in Japan, followed by NEC and Ericsson. Infonetics expects the Japanese mobile infrastructure market to stay positive this year, plateau in 2014, and eventually decline by 2017 as LTE deployments wind down.
In the first quarter 2013, global services represented approximately 51 percent of Nokia Siemens net sales, compared to approximately 52 percent in the first quarter 2012 and approximately 50 percent in the fourth quarter 2012.
The decline in global services was due to lower net sales in professional services and care. The increase in mobile broadband was primarily due to higher LTE net sales, partially offset by lower WCDMA and voice and IP transformation net sales.
On a regional basis, the decline was due to lower net sales in Europe and Latin America which both saw lower net sales in mobile broadband, partially offset by higher net sales in North America which saw growth in both mobile broadband and global services net sales.
Its mobile broadband and global services net sales declined sequentially in all regions except for North America. North America was approximately flat on a sequential basis, due to an increase in Mobile Broadband net sales, almost completely offset by a decline in Global Services net sales.
Nokia Siemens Networks’ operating margin during the first quarter of 2013 stood at 0.1 percent against -34.1 percent in Q1 2012.
Nokia Siemens Networks’ research and development expenses decreased 16 percent in the first quarter 2013 primarily due to reduced investments in business activities that are not consistent with the company’s focused strategy.
Outlook
Good news for Nokia Siemens is that LTE in China will grow at a 38 percent CAGR from 2012 to 2017 as predicted by Infonetics. Also, the Japanese mobile infrastructure market to stay positive this year, plateau in 2014, and eventually decline by 2017 as LTE deployments wind down.
Nokia Siemens Networks on Thursday said its operating margin in the second quarter 2013 to be approximately positive 5 percent, plus or minus four percentage points.
