AT&T Inc. (T) plans to sell Nokia Corporation (NOK) Windows Phone smartphones starting next year. The two companies are still negotiating the final terms and conditions.
The second-largest U.S. mobile service provider might offer Mango-powered Lumia 710 or Lumia 800. Both smartphones was launched by Nokia last month. This is the first pair to support the Microsoft Corporation (MSFT) Windows Phone 7 platform.
The deal would be a boon to Nokia, which is loosing its market share to Apple Inc.‘s (AAPL) iPhone and Google Inc.‘s (GOOG) Android platform. Being the largest mobile phone manufacturer in the world, Nokia must continue to grow its market share to retain its leadership position. But it recently lost half of its share in the market and now holds only 20% of it. As a result, the company is seeking to re-enter the U.S. market early next year and introduce its handsets on multiple carriers. In this context, T-Mobile is expected to sell Nokia’s Lumia 710 handset from January. Nokia is also in preliminary talks to sell its product to sell its devices through Verizon Communications (VZ).
Coming to AT&T, the sale of Windows Phone in the U.S. market would be a big challenge as the hugely popular iPhones and Androids will give head-to-head contest. Nevertheless, AT&T is progressing well on its smartphones and iPhone sales. Despite the loss of its exclusive hold to Verizon, AT&T is riding high on iPhone sales.
Additionally, the company is introducing Android smartphones that are gaining new subscribers and driving wireless revenue. Further, if AT&T’s ambitious $39 billion proposed mega-merger with T-Mobile is approved, it would draw more wireless subscribers and subsequently improve revenue and profits with enhanced networks. The takeover of T-Mobile is facing a major bottleneck with the Department of Justice filing an antitrust lawsuit to block the deal.
While waiting for Nokia’s smartphones to arrive at AT&T stores and finding out its implications, we are maintaining our long-term Neutral recommendation on the stock with the Zacks #3 (Hold) Rank.
