European bank’s €500m 5G loan to Nokia doubles Ericsson’s €250m

European bank’s €500m 5G loan to Nokia doubles Ericsson’s €250m

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A European Union bank has lent Nokia €500 million to help it develop 5G technology – twice as much as Ericsson won from the same institution in May 2018.

The European Investment Bank (EIB) said the loan was supported by the European Fund for Strategic Investments (EFSI), a key element of the Investment Plan for Europe, also known as the Juncker Plan, named after Jean-Claude Juncker, president of the European Commission.

Nokia CFO Kristian Pullola said: “This financing bolsters our 5G research efforts and continues the broader momentum we have already seen this year in terms of customer wins and development firsts, supporting our relentless drive to be a true leader in 5G – end-to-end.”

At the end of May the EIB said Ericsson would get a €250 million loan to support research, development and innovation into the creation of 5G mobile telephony, also as part of the Juncker Plan. 

The EIB said the Nokia loan “will support a key European technology provider that invests heavily in research, development and innovation in an area which can produce enabling technologies for innovation and growth in Europe”.

EIB vice-president Alexander Stubb, responsible for the bank’s lending in Northern Europe, said: “5G is happening fast, faster than most people even expected. It’s anticipated that it will enable entirely new business cases, while dramatically enhancing existing wireless applications.”

Three months ago Stubb, who was briefly president of Finland in 2014-15, said of the Ericsson loan: “Ericsson has been one of the defining contributors to what mobile telephony is today and I think we can only be proud to support this. Apart from supporting European technology, this project will also make sure that thousands of highly-skilled jobs will stay in the EU.”

Now the EIB says: “Nokia’s end-to-end network proposition goes from the radio network to the internet protocol and optical networks for transmission, the packet core network, service platforms and all the software and services associated with the whole system. In essence, Nokia’s portfolio covers all the needs of a telecom operator that wishes to provide fully converged fixed-mobile communications services critical for the era of 5G.”

Pullola said: “We are pleased to land this financing commitment from the EIB, who shares our view of the revolutionary nature of 5G – and the realisation that this revolution is already underway.”

The EIB said that the loan, which extends Nokia’s debt maturity profile, has an average maturity of approximately five years after disbursement, which can take place at any time during the next 18 months.

Viavi’s vice president of wireless solutions, Li-Ke Huang, commented this morning: “The US, China and South Korea have invested early and heavily to try and establish a leadership position in the ‘5G race’. This investment from the EIB is a crucial show of 5G support in Europe, and a demonstration of the region’s commitment to developing next generation networks.”

Last week Nokia said it expects to earn up to €3 in royalties for each mobile phone that uses its 5G patents.

An Ericsson official told Capacity: "Ericsson has a strong cash position and a well-managed debt maturity profile that secures our long-term financing requirements.  We are currently doing major investments in 5G and credit facilities from EIB were announced in May this year of about €250 million that contributes to these investments."  Ericsson had an earlier loan of about $700 million with EIB.  "The credit facility in May followed another loan from the Nordic Investment Bank of $220 million granted in December 2017," said Ericsson. 



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