Nokia Oyj (NOKIA) Earnings Call Transcript

Hi. I'm Ester Navarro, Head of Core Networks Portfolio Marketing. Thank you for joining our Nokia Core Talk. today, I'm with Fini Irles. She is the Head of Data Core Engineering at Vodafone Group. Thank you so much for being with us at our Nokia Core Talk.

Thank you Ester, I'm glad to be here with you today.

Vodafone is the largest European and Africa communication company. They offer a broad range of services, including mobile and fixed networks. They serve in 22 countries with over 330 million of mobile subscribers. Recently, they appointed a new CEO and announced a new strategy, focusing on connectivity and digital services to enable an inclusive and sustainable society.

Fini, we have the pleasure of working with you, together deploying our Packet Core in 3 Vodafone markets; Italy, Spain and Ireland. How do you expect 5G stand-alone core and specifically the single-packet core strategy to support you in these markets? But first of all, could you explain us what do you mean by Single Packet Core?

Let's start with Single Packet Core, what is it for me. It's basically a convergent core and will serve both needs, 4G and 5G for us. And how it will help us? From my viewpoint, it is going to produce a simplification in our network because after the journey, we will be able to dismiss some of our still present legacy packet core. I'm also expecting that it will bring simplicity, speed and an increase on how we can use more efficiently current hardware deployed, comparing virtual towards cloud deployments. It also opens with 5G SA to flourish more our partnership with our corporate customers because we're going to be able to boost joint innovation and offer to our customers the network that they need. Ester, I'm wondering, in your view, what might be the benefits that deploying Nokia Packet Core can bring to operators as ourselves?

Thanks, Fini. I would like to highlight, first, our global experience and our long history in the telecommunication market. We have a strong market position, and we operate in almost 130 countries. I don't know if you remember it, but Nokia ran the first 2G core in the world, and it was more than 30 years ago, and we have built trust during decades with our customers. Another benefit is that our products are standard compliant, and we have a very solid road map and a clear future vision of the future of our networks. We are constantly investing in R&D, and we offer our customers open solutions, supporting multiple clouds, hardware agnostic and our products are cloud native by design. Also very important for the Vodafone strategy is our common packet core that supports all mobile generations and access domains -- before your mention 4G and 5G, but our common packet core support 2G, 3G, 4G and 5G. This means for Vodafone that we are offering you a smooth evolution to 5G to support high G throughput, ultra-reliable low latency, slicing and AI-enabled automation. [Presentation]

So Fini, Let's talk about data services. How do you see the benefits of 5G? And what are the most promising use cases for Vodafone Group?

5G offers versatility. It brings a speed, latency and multiple connections. The first use case that comes to my mind is FWA. Why? This is very useful for customers that are demanding mobility and at the same time, to not be dependent on sending a technician to the home, so they can build the service anywhere. And it brings somehow a seamless experience quite comparable to a fixed service. Some of the use cases are a STEP. A STEP is Safer Transport for Europe Platform, and it helps drivers to run safer in a more protected environment when they are commuting, it helps riders or pedestrians in a city. For this use case, latency is a key fundamental factor. Many other use cases can be explored in a smart cities environment. So 5G enables very large number of users connected as for IoT devices, such as water meters, traffic lights, street lights. Recently, Ghana has named Vodafone as a Leader in the 2023 Gartner Magic Quadrant for Managed IoT Connectivity Services Worldwide. I also have in mind drones; drones might play a fundamental role to help people to avoid to work in the challenging health and safety conditions, thanks to streaming images. And for instance, it's going to be very helpful in speeding up in rescue activities. Ester, you have a privileged global view. In your experience around the world, what are the most famous or most usable use cases on 5G right now?

So we have many difference depending on the regions. North America and China were the first started with 5G standalone, and they focus on enhanced mobile broadband cases, cases mostly for the consumer to bring them fast data rates and just to build premium services. Then Europe came a bit later. They have been focusing, as you probably know, they have been focusing more on the enterprise market. And what we see is that you, European operators, you have focused on slicing the networks for the different enterprise cases. Also bringing the UPF appliance on the campus to bring low latency applications to the networks because they are much closer and also something that you can benefit off is offloading the traffic because offloading the traffic means that you don't need to carry a lot of traffic through the network. That is something that we call local breakout. In Asia Pacific and Japan and also in India, they have been having a similar focus to Europe, and they are focusing as well on gaming. Latin America and Middle East and Africa, they are still analyzing how to monetize 5G. And another application that you mentioned before and that is really big and popping up all over the world is fixed wireless access because it's bringing high bandwidth connection to fixed subscribers. This has been the difference that we have seen around the world. But now in general, what we have seen is that the consumer use cases has been offered first as cloud gaming and virtual and augmented reality, but this is still very much a niche. The case that we see with major growth potential is related to industrial use cases. Slicing will let enterprise to tailor their services to their specific network needs and low latency and automation enable use cases like robotics, which can improve manufacturing. And I want to share with you something that I just heard from my colleagues. We are now here recording in Finland. And I heard that in Helsinki, you can order food and you get this delivered by robots. They are like self-driven small robots that bring you the food to home. I have seen the pictures, it's really amazing. That could be also another use case that we will see deployed around the world very soon. [Presentation]

Fini, which technology are crucial or the best enabler for your Single Data Core strategy? any foreseen challenges?

This is a very good question, Ester. Let's start with the enablers. You already covered one of them; Network Slicing. This is definitely a key one. We recently made use of it in U.K., in the King's coronation. And thanks to Network Slicing, we are able to split our network into this concept of slices, basically to serve different needs. So sometimes our customers might ask us, streaming means high speed. Some other slices might be serving emergency use cases or multi-edge computing to grant low latency. For instance, in autonomous cars needs, so the V2X concept. And then we have the large enablers on IoT and Smart Cities. And there, the throughput is not the fundamental piece. It is more enabling a large number of connections to the network. It's also very promising, the APIs ecosystem because this would enable somehow to expose our network through the concept of Network-As-A-Platform, some other operators called this Open Gateway. And with that, some developers can make use of it to offer other services to customers. I remember last year that we delivered a dynamic bandwidth use case, exposing our network to serve our customers located in La Palma in Canary Island. You might remember this emergency that we suffer because of the volcano. So this helped us to react very fast and cover basic connectivity needs for our customers there. Now if I look more into operator side, what are the enablers? Hyperthreading is one fundamental, both for the control and specifically for the user plane. Why? Because this will bring a more efficient network and will help us to decrease the cost per giga. Automation, orchestration, continuous testing, continuous deployment. It will help us to overcome the complexity that CNFs, that cloud is bringing, so to ensure that we can make shorter time to market.

Very interesting; Really caught my attention of the volcano plot in Spain, and it's great. How are we helping the society with our technology, right?

Yes. This is so rewarding as a professional. Let me move now into the challenges, Ester. So if road maps are delayed, if some of the futures are not coming when expected, if cloud network functions technology is not mature enough when we will need to move large and big amount of throughput in an optimized manner, this will be definitely one of my first challenges to take care of. One other might be the multi-vendor ecosystem. It is true that 3GPP defined very well all standard interfaces, but some challenges on that area might arise additionally, let's not forget, this is a new quantum leap transformation technology that plays usually very well in greenfield environments whenever you are starting from scratch to deploy a network. But on our side, we need to ensure a smooth transition from our current network and make sure that there is service continuity. This is, it must preserve seamless customer experience. Ester. May I ask you now, how can Nokia support our objectives for data services with your technology?

Sure. Well, let me start again something that I mentioned before is the -- I think we can support you with a smooth migration to 5G stand-alone because what I mentioned before, our converged packet core, what we support all mobile generations, 2G, 3G, 4G and 5G and also all access domains from fixed to mobile, satellite you name it. Also, our solution can be implemented on multi-cloud infrastructures. In your case, Vodafone, we are supporting VMWare Tanzu. We are also fully compliant with the 3GPP standards with release 16 and 17 and our open and simplified APIs can empower developers to create new service easily what is fundamental right now. And with this, what we will do, we will unlock the potential of 5G. We know the potential of 5G is very much into the new use cases that are to come. And something that I believe that Nokia is a pioneer in the market, it's our offer, Core Software-As-A-Service. I don't know if you have heard about it, but this is the perfect solutions because it will allow you to deploy on-demand services in just a few clicks. For example, there is a concert and you need more extra, more capacity, extra capacity for just a short period of time. This is something that you can quickly deploy using our Nokia Core Software-As-A-Service solution.