Stockholm: Nokia Siemens Networks, trying to sustain nascent sales growth in the cut-throat phone-equipment industry, is targeting the United States market where Chinese rivals face political hurdles and rising data use entices carriers to spend.
The venture owned by Nokia and Siemens is forgoing less lucrative deals in Africa and the Middle East to focus on the US, Rajeev Suri, chief executive. said last week in an interview. In a shrinking global network-gear market, US demand is rising as AT& and other carriers add capacity.
Suri, into his fourth year as chief executive, is trying to find areas of strength for the venture that last month posted its first quarterly sales increase and profit since last year. Chinese rivals Huawei Technologies and ZTE, which have made gains globally, are struggling to win orders in the US as the country's officials advice against buying from them.
"The industry is a tough place," Suri said in Munich. "The US is certainly an opportunity so we'll be there." Equipment for faster networks allowing consumers to watch video and browse the Web on their mobile devices helped Espoo, Finland-based Nokia Siemens boost sales in the Asia Pacific region 29 per cent last quarter, driven by South Korea and Japan.
Sales in North America fell 6 per cent, a trend it is now trying to reverse by ramping up marketing spending and tapping the rising demand for data services.
Nokia Siemens vies with Huawei for the second spot in the global wireless-gear market behind Ericsson AB of Sweden.
While cheaper equipment has helped Huawei and ZTE gain market share in Europe and Asia, US carriers have so far been wary of awarding them large contracts.
The two companies, China's largest phone-equipment makers, provide opportunities for Chinese intelligence services to tamper with US telecommunications networks for spying, the US House of Representatives Intelligence Committee said in a report, advising against using their gear. China's commerce minister this month rejected the US concerns.
Nokia Siemens may also benefit from another rival's woes. Alcatel-Lucent, traditionally strong in the US because it was formed through a merger of Murray Hill, New Jersey-based Lucent Technologies and Alcatel, is weighing asset sales to cope with mounting losses that sent its stock to a 23-year low.
"The competitive environment within the mobile-equipment industry has changed in favour of NSN," said Sami Sarkamies, a Nordea Bank analyst in Helsinki. "It looks like the Chinese vendors will be kept out of the US, while NSN's improving profitability makes it a more compelling partner than Alcatel-Lucent, which is struggling."
Nokia Siemens won a deal in May to build a faster wireless network for Deutsche Telekom AG's US unit. Earlier this year, AT&T and Verizon Wireless awarded it smaller contracts, which Suri called 'beachheads' to potentially larger deals later.
AT&T, the second-largest US wireless carrier, plans to invest $14 billion in wireless and wireline improvements over the next three years. Nokia Siemens had global sales of €3.5 billion ($4.5 billion) last quarter.
The United States is one of the three mobile-phone markets where operators have changed their pricing strategies to better reflect users' data consumptio