Telecom equipment manufacturing unit of Nokia has seen a lot of changes in the last few weeks.
It has changed its name to Nokia Solutions and Networks after Siemens exited the venture and then the handset division got acquired by Microsoft. All this has happened amidst a restructuring programme being undertaken by the equipment maker in bid to cut down on loss making business and focus on wireless broadband.
It’s actually net positive for NSN. And I think that you could see that in lot of the analyst’s reactions, you could see that in the Nokia stock price. Having lived in Finland for two years, I can say it has been an emotional thing because it is such a strong a brand. And so that’s tough, but from the NSN perspective, this is absolutely positive and clearly if you look at the market reaction positive for Nokia shareholders as well.
How will this impact NSN in India?
Because the devices business has been so strong here, I think people will kind of wonder does this mean that NSN is going to be less focused on India because the parent company devices business is not there anymore. That is absolutely not the case. I don’t see really any impact from that on our presence here.
Our presence is based on our customers here, but much more than that is how we can leverage the incredible talent in this country for other things as well and I don’t see that change in frankly the near or the immediate term. I think that our presence here is very strong and I don’t see that changing.
With the fresh funds coming in can we say that NSN’s plans to sell stake to private equity players is in cold storage?
We surely don’t need it. Our ownership structure has been subject to considerable debate and discussion over a long period of time.
A lot of that kind of rumour stuff has been completely untrue, but right now we’re 100 per cent owned by Nokia and obviously a very large part of the Nokia Business.
And in some ways, I worry that people kind of get distracted by those kinds of issues and really what matters is how we run NSN.
We’ve been running the business quite well and not just slashing cost, but really fundamentally changing how the business is run, how we govern the business, how we make decisions, and that puts us in a great position today.
How do you compare NSN’s gameplan to focus on only a few segments like wireless broadband to that of a player like Ericsson which is offering solutions across various segments?
I think actually our focused strategy is absolutely the right one for us and the results show that. But what is important is that when we talk about focus, it is about kind of the breadth of the portfolio, not the depth of it. If you take LTE, we absolutely believe that in LTE you’ve to have a lot of scale, you’ve to be a global player because you have to invest a lot of money in R&D. So what we’ve said is we’re not going to do X, Y, and Z, but when we do LTE, it’s not just a business for us in Korea and Japan, it is a business for us globally. I think the strategy has worked and it is starting to drive the strategy of others.
How has the threat from Chinese equipment vendors played out?
In terms of Chinese players in many ways their honeymoon is over. There was a period when everyone was very excited about what they were bringing in and to be fair they have got some strength, good technology and good people. So, I would not dismiss them at all, but I think that the honeymoon is over. It is hard to be a global player when you don’t have access to certain markets. Without being a strong player in the US, it is hard to claim to be a truly global-scale player and so that’s I think their challenge.
How is NSN dealing with the overall slowdown in the economy, especially in markets like India?
We have actually pretty good deal momentum. The benefit that we’ve as a company even when the market slows down is we’re very lean. We’ve gone through this very dramatic restructuring and we’ve built a company that we believe can succeed. Clearly, the billion-dollar deals are not coming and but there are certain areas of spending that are happening such as Wi-fi, security and core virtualisation. We signed seven deals in the first half of 2013.
Are you seeing change in the business models in the way deals are being structured?
I don’t think there is necessarily a fundamental change. We also see is in recent times apart from the cost primary being the motivation for the deals, there is also probably the need for the operator to help us on their revenue side, particularly how to deal with the over-the-top players or how to maximise the revenue through customer experience management.