Verizon chooses Samsung Electronics over Nokia as its 5G equipment supplier

Nokia (HEL: NOKIA) has been committed to expanding its 5G deals with companies from across the world in recent months. On Monday, however, sources confirmed the Finnish telecom company to have met a setback as the U.S. based Verizon chose Samsung Electronics as its 5G equipment supplier over Nokia.

In related news, Nokia’s phone shipments were recently reported to have tanked to about 8.6 million due to COVID-19 restrictions.

Shares of the company were reported a little under 2% down in premarket trading on Monday. Nokia is currently trading at £3.33 per share that represents an about 70% recovery since March when it printed a year to date low of £1.98 per share. The stock started the year at £3.11 per share. Here’s what you need to know about the value investing strategy.

Verizon’s contract is valued at £4.86 billion

Owing to the rising U.S. – China tensions, Huawei was blacklisted from contesting as 5G equipment supplier in the United States, that opened a window of opportunity for Nokia and Ericsson. The £4.86 billion contract from Verizon, however, has positioned Samsung Electronics as a fierce competition for the two companies in the U.S.

Nokia’s spokeswoman refused to make any further comments on the news at this stage. She, however, said on Monday:

“We play a critical role in enabling Verizon’s 3G and 4G networks and continue to work with them to accelerate innovation in 5G. They remain a top three global customer.”

Major telecom companies, including Verizon, are known to collaborate with multiple suppliers, that contribute to building different parts of the company’s network.

Nokia might have to slow down its investments in technology

Analyst Janardan Menon of Liberum commented on the update on Monday and said that it will now be harder for Nokia to match its rate of investments in technology with its rivals. Nokia’s loss, he added, may result in Ericsson securing a greater share in Verizon’s contract.

Liberum currently has a rating of “hold” on Nokia. A spokesman for Ericsson refused to comment any further on the news on Monday. Brokerage JP Morgan had already warned in July that Verizon is likely to minimise the role of Nokia as its primary radio access network (RAN) supplier and opt for Samsung in the upcoming months.

At the time of writing, the Finnish multinational telecom company is valued at £18.78 billion and has a price to earnings ratio of 33.31.