Nokia Set to Secure 5G Contract with Portuguese Telecom Operator MEO

Nokia (HE) is on the verge of clinching a significant contract to supply 5G radio equipment to MEO, one of Portugal's leading telecom operators, according to an internal Nokia blog post and sources familiar with the matter. This marks a notable shift, as MEO has historically relied solely on Huawei for its 2G, 3G, and 4G Radio Access Network (RAN) equipment.

Transition from Huawei to Nokia

Despite Huawei's stronghold on MEO's RAN equipment market, Nokia is poised to step in as a key supplier for 5G. The contract, although agreed upon, has yet to be signed, with an official announcement expected as early as next month.

"In recent years, MEO ... has been supplied in RAN only by Huawei. In other words, Huawei has had a 100% market share in 2G/3G/4G. We have now been selected to replace Huawei in some of the key markets in Portugal," wrote Tommi Uitto, president of Nokia's mobile networks, in an internal blog post seen by Reuters.

MEO, formerly known as Telecom Portugal, is currently owned by France's Altice. The shift to Nokia for its 5G needs indicates a strategic move by MEO to diversify its supplier base amid global concerns over Huawei's dominance in the telecom equipment market.

Market Dynamics and Challenges

RAN equipment forms the bulk of telecom sales for major players like Huawei, Nokia, and Ericsson. However, a decrease in demand for new equipment from telecom operators since last year has significantly impacted both Nokia and Ericsson, leading to substantial job cuts within these companies.

Nokia's anticipated contract with MEO is a crucial win amid these challenging market conditions. It also aligns with broader industry trends where telecom operators are increasingly looking to diversify their supplier portfolios, partly driven by geopolitical factors and security concerns related to Huawei.

Future Implications

This potential contract with MEO not only strengthens Nokia's position in the European telecom market but also sets a precedent for other operators who might consider shifting away from Huawei. As the 5G rollout continues globally, securing such deals is vital for Nokia to maintain its competitive edge and recover from the recent downturn in demand.

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