Nokia has denied reports that it is being pushed out of Verizon’s 5G network, which would make the US telco dependent just on Ericsson and Samsung, unless it decided to open up its supply chain to new entrants.
Verizon also said that Nokia was still a supplier, and the report might have been just another quickly forgotten rumor, were it not for the atmosphere of uncertainty that surrounds the Finnish vendor at the current time. Having been forced to change its 5G chip architecture last year, and with reports of performance issues for some early customers, notably Sprint, Nokia now going through a change of CEO amid reports of takeover bids, while trying to regain lost momentum in 5G with its new cloud-native and open architectures.
The reports had come from Ryan Koontz, analyst with Wall Street firm Rosenblatt, who said Verizon would replace most of Nokia’s equipment with Samsung gear, in a contract that could be worth up to $1.5bn per year over a 5-7 year period for the Korean company. That would result in about a 50:50 split with Ericsson.
According to Reuters, JP Morgan then downgraded Nokia stock based on “real risk” that the vendor might lose business at Verizon, one of its key 5G customers.
Verizon would not comment on whether it was shifting the share of the network between its three suppliers – or any new ones – but insisted Nokia was still in the mix. A spokesperson said: “We are accelerating our 5G deployment and work with a diverse set of partners to deliver a best-in-class network and customer experience. We work closely with all vendors in our ecosystem on our future plans. Nokia continues to be an important partner.”
Nokia said in a statement that it was “proud to serve Verizon, and we are committed to continuing to help them build the best, most reliable and highest performing network”.
Koontz’s client note said: “They’re going to cut bait completely on Nokia — take them to zero. It’s a big deal. This is probably the biggest change in a telecom vendor in a decade.” He cited multiple unnamed sources, and speculated that if Verizon did go for a rip-and-replace process in its Nokia markets, that could delay its deployment of fully mobile 5G nationwide.