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Nokia (NYSE: NOK), the Finnish telecom equipment giant, is making significant strides in the U.S. market by securing a fibre network agreement with AT&T (NYSE: T). This strategic move comes on the heels of Nokia's disappointing loss of a major contract to Swedish competitor Ericsson (NASDAQ: ERIC), which was awarded a substantial deal in December to establish a telecom network covering 70% of AT&T’s wireless traffic by 2026.
The newly signed fibre deal is being touted by Nokia as a "significant milestone," although the company refrained from disclosing its financial details. However, it promises to be a game-changer that will enhance broadband access for millions across the United States. As of Q2 2024, AT&T's extensive fibre network has already connected 27.8 million locations, and this new agreement is poised to further expand that footprint.
Despite a troubling 32% decline in profits reported by Nokia in July, CEO Pekka Lundmark remains optimistic. He predicts a strong turnaround in net sales during the latter half of the year, driven by an upswing in the fibre market and a substantial $42 billion U.S. government initiative aimed at enhancing citizens' access to high-speed internet. Moreover, Nokia emphasizes that this fibre project aligns with "Build America, Buy America" guidelines, making it eligible for government funding.
In addition, Nokia recently acquired U.S. optical networking specialist Infinera for $2.3 billion. This move appears targeted at capitalizing on the influx of investments into data centers, particularly relevant given the surge in demand driven by advancements in artificial intelligence.
