Will private networking save Nokia from its ongoing radio access network (RAN) woes?

It’s a question worth asking, because Nokia is currently ranked at number two behind Huawei but ahead of Ericsson in the Dell’Oro Group private wireless supplier market share stakes. So we at Fierce Network wondered if Nokia’s private networking prowess could help relieve the company’s worries about the general RAN market.

Nokia reported a 20% decline in revenue in the 1st quarter of 2024 at $4.95 billion compared to $6.24 billion for the same quarter in 2023. The company said that mobile business continued to be impacted by particularly low levels of spending in North America and India, which led to a Q1 net sales decline of 39%.

“Globally, we expect Q1 to mark the low point in demand with activity then progressively picking up through the remainder of 2024 consistent with more normal seasonality,” said Nokia CEO Pekka Lundmark on its quarterly earnings call.

We asked several analysts what they thought of Nokia’s position in the private networking sphere.

“The private cellular market is growing quickly and will be big enough in a few years to compensate for the ups and downs of the telco market,” Joe Madden, lead analyst at Mobile Experts told us in an email. “It’s not large enough yet, and a few missing pieces need to mature for the market to accelerate in key verticals. 

“Nokia is currently in a good position…but it will take some time before private wireless moves the broader mobile infrastructure needle,” Madden noted.

“Our forecast is resting on the assumption that the projected 21% Compound annual growth rate (CAGR) in private wireless taken together with the lower starting point will not be enough to turn around the combined public plus private RAN market over the short-term or near-term,” agreed Dell’Oro VP and RAN maven Stefan Pongratz.

Righty-ho! By the way, the long-term would mean three to five years out. So we could be close to the 2030 launch of 6G by then.

Principal analyst at AvidThink Roy Chua noted that Nokia’s private RAN growth is still limited and slowing, according to his firm’s most recent report.

“The year-on-year growth for Q4 2023 over Q4 2022 is 26.8% and for Q1 2024 over Q1 2023 is 22.7%, so while decent, the rate is declining,” he said in an email. “Plus many of these are small networks and I don’t expect the median or average number of radios or cores in these to be very large yet.”

Chua noted that fellow analysts who estimate the U.S. market for private wireless, such as Analysys Mason have predicted that private wireless will be at 5% share of public network spend in 2028 even with a 48% CAGR from 2022 to 2028. “That’s consistent with what we see in the market when we speak with vendors, carriers, and early enterprise adopters, he said.

What’s RAN’s runway?

Even with 4G and 5G private networking taking off in Africa, Asia and Europe, as well as North America, the private network revenue gains won’t match the revenue lost after public RAN spending stated to decline in 2023.

Nokia — and other vendors — will need public RAN growth to begin again, as well as a prosperous private networking market, in order to deliver healthy quarterly profits. 

Some commentators may think that more open radio systems like open RAN will deliver systems that can enable operators to mix and match RAN elements more easily and increase sales. Even the latest reports, however, have predictions that open RAN will only represent 6% to 8% of the entire RAN market by the end of 2024.

Most likely, the next tranche of real operator spending on 5G will only take place as part of an an update to 5G-Advanced, which will see some operators move to an actual 5G core as part of the requirement to support 5G-Advanced. This, however, will mostly be a core and software upgrade, probably with some in-field updates to support the latest multiple input multiple output (MIMO) antenna arrays.

So, no, private networking strength alone won’t be enough to cure Nokia’s woes.

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