Nokia announced a 24 per cent fall in its second quarter revenues and reported another net loss for the quarter.

Net sales for the period amounted to €5.7 billion (US$7.5 billion), while it shrank its net loss to €227 million (US$298 million) compared to a loss of €1.4 billion for the same period last year. Excluding non-cash write-downs, the company would have posted a profit of €382 million.

Commenting on the second quarter results, Stephen Elop, Nokia CEO, said: "We’re pleased to report an underlying operating profit for the fourth consecutive quarter on a group level. We benefited from another strong performance at Nokia Siemens Networks (NSN), which continued to deliver well against its focused strategy."

Smartphones

In the second quarter 2013, Devices & Services total smartphone volumes fell to 11.7 million units.

The year-on-year decline in smart devices volumes in the second quarter 2013 continued to be driven by competing smartphone platforms and the transition from Symbian products to Lumia products.

Symbian volumes decreased from six million units in the second quarter 2012 to approximately zero in the second quarter 2013. Lumia volumes increased from four million in the second quarter 2012 to 7.4 million in the second quarter 2013.

On a year-on-year basis, net sales decreased in all regions primarily due to lower sales in the Mobile Phones business unit. The largest year-on-year decline in net sales was in Greater China followed by Asia Pacific, Middle East & Africa and Latin America.

Mobile Phones

During the second quarter 2013 Nokia shipped 53.7 million mobile phones, of which 4.3 million were Asha full-touch smartphones. That compares with shipments of 88.5 million handsets a year ago.

Nokia Siemens Networks

Revenues fell by 17 per cent to €2.78 billion, of which 52 per cent was for services. The decline in revenues was put mainly down to disposals of divisions, although excluding that, sales would have still fallen by 11 per cent due to reduced wireless infrastructure deployment activity.

Non-IFRS operating profit at NSN amounted to €328 million, up considerably from €28 million in Q212.

Iraqi cellco Korek Telecom has selected Nokia Siemens Networks (NSN) to deploy its advanced radio, microwave transmission and packet core network elements. The operator has also renewed its care and managed services contract with the company.

Under the contract, NSN provides Korek Telecom with its Flexi Direct solution that simplifies network planning, lowers capital and operating costs for operators, and reduces data transmission delay, thus ensuring high-speed broadband for end users. At present, NSN is the only vendor providing fully flat architecture for HSPA in the global telecom market. As part of its radio network, NSN also provides its Single RAN (radio access network) platform, which is based on its compact and energy-efficient Flexi Multiradio base station, to support Korek Telecom’s 2G and 3G networks and ready it for the future with LTE capability.

Siemens has sold its 50 per cent stake in Nokia Siemens Networks (NSN) for €1.7 billion (US$2.2 billion) to its joint venture partner, Nokia.

Siemens has long been looking to sell, and it had been expected that the buyer would be a private equity investor after a partial floatation of the stake had been ruled out.

Nokia said plans to retain the existing management and governance structure at NSN, which is not surprising as it already had management control of the company.

Stephen Elop, president and CEO of Nokia, commented: "With its clear strategic focus and strong leadership team NSN has structurally improved its operational and financial performance. Furthermore, NSN has established a clear leadership position in LTE, which provides an attractive growth opportunity."

The two companies set up the joint-venture in 2007, but it has struggled in recent years and underwent a substantial downsizing exercise last year. That effort has however turned the company around and it is expected to turn a profit within the year.

Nokia said that it will continue to consolidate NSN for financial reporting purposes as well as working towards pitching the company as an independent entity.

NSN’s operational headquarters will remain in Espoo, Finland, and the company will continue to have a strong regional presence in Germany, including its major hub in Munich.

The company’s restructuring plan remains unchanged as a result of the change in ownership.

Nokia also confirmed that the Siemens name will be phased out, and the new name will be announced once the deal secures regulatory approval.

The purchase price totals €1.7 billion, of which € 1.2 billion will be paid in cash at the closing of the transaction. The balance of €500 million will be paid in the form of a secured loan from Siemens due one year from closing. Nokia has obtained committed bank financing for the €1.2 billion cash portion.

Mobily is set to further modernise and expand its 2G, 3G and 4G networks between 2013 and 2015 having signed a Memorandum of Understanding (MoU) with Nokia Siemens Networks (NSN). As per the MoU, NSN will facilitate a long term export credit of US$325 million with Finnvera, Finnish Export Credit (FEC); and lenders Credit Agricole and Deutsche Bank. Mobily will use this credit to purchase advanced solutions and services from NSN.

The Finnish export credit agency Finnvera and its subsidiary FEC have issued their guarantee and financing offers. Mobily has mandated Credit Agricole and Deutsche Bank to structure and arrange for Shariah compliant financing, for which the services of Latham & Watkins as legal counsel to Mobily, and Allen & Overy as legal counsel to lenders have been sought.

Khalid AI Kaf, CEO, Mobily, said: We will be investing US$325 million over the next 18 months to upgrade and expand our mobile broadband infrastructure. This infrastructure upgrade using NSN’s advanced solutions and services will set a new benchmark in providing unmatched data service experience in Saudi Arabia.”

Qatar’s Ooredoo and Norway’s Telenor won licences to provide telecommunications services in Myanmar.

Companies have been lobbying hard to enter the market, despite the risks of rolling out costly networks in a country that has yet to pass a law to govern the sector.

Ooredoo plans to spend US$15 billion over the 15-year licence period, including operational and capital expenditure, licence fees and taxes, Jeremy Sell, Ooredoo chief strategy officer, told Reuters.

"The licence is actually a small part of it," said Sell.

He said Myanmar’s relative lack of mobile communications infrastructure was advantageous in that his company would not need to upgrade old networks, but could create a purpose-built data network with voice capabilities.

"It’s not a mobile phone business we are building, it’s a broadband network," he said, adding Ooredoo’s Myanmar operations were likely to break even after four years.

The Ministry of Communications said that if one of the two licence winners failed to meet post-selection requirements, the back-up candidate would be France’s Orange in partnership with Marubeni Corp of Japan.

The winners had "committed to offer a wide range of services to the public at affordable prices in both urban and rural areas", it said.

The lower house of parliament voted on June 26 to delay the award of the two licences until a new telecommunications law was enacted, but the government body overseeing the tender said parliament had no authority to delay the process.

"In the telecom sector, there is geopolitical risk and regulatory risk and it (Myanmar) has them both," said Ooredoo’s Sell.

"It’s a very young democracy and the organs of state are in their infancy and don’t have much experience, but we were very pleased the process was so intelligently planned and executed and with transparency. So if they continue as they have started we would be very happy."

The winners were selected from a shortlist of 11 bidders, whittled down from more than 90 companies and consortia that had expressed interest in working in a fledgling market of 60 million people, where nine per cent at most have a mobile phone.

State-owned Posts and Telecommunications (MPT) is the sole provider of telecom services, according to its website.

State-controlled Telenor, which has 150 million customers worldwide and operates in neighbouring Thailand and Bangladesh, said it would launch its network next year and achieve nationwide coverage within five years.

The government has said it will finalise the 15-year licences by September and the chosen operators would need to launch services within nine months. They have to provide voice services across three-quarters of the country within five years and data services across half of it.