After a U.S. House Intelligence Committee found that Huawei and ZTE, which provide telecoms equipment to cellular and wired networks, "cannot be trusted" to be free from foreign state influence and "thus pose a security threat to the United States," it left many networking companies which buy their products up the creek without a paddle.
Finland-based Nokia Siemens Networks (NSN) is looking to fill the gap, and what an opportune time: the company is sinking and it needs to expand stateside or face potential collapse.
In a Bloomberg interview, NSN chief executive Rajeev Suri said that while the "industry is a tough place," he noted that: "the U.S. is certainly an opportunity so we’ll be there," hinting that the firm could expand stateside to take advantage of the market void left by the damning verdict of the U.S. House committee.
Joint owned by Nokia and Siemens, the venture has been in operation since 2007. But in spite of its short life span, the firm has already started to sink. Earlier this year, it warned that it would have to cut as many as 400 jobs to cut global operational costs, amid rumors that rival Ericsson could buy one of the firm's more-survivable divisions.
By leaving less lucrative contracts in Africa and the Middle East, the company is looking to North America where sales in network equipment for faster connections has fallen by 6 percent. It's now trying to reverse the trend and pump up marketing spending in a bid to tap the potential goldmine of data services in the region.
For instance, Bloomberg reports that major global networks, such as Germany's Deutsche Telekom (which owns U.S.-based T-Mobile USA), and AT&T, which wants to spend $14 billion on network investments in the next three years, are looking to award contracts to build larger, faster wireless networks for their millions of customers.
Though NSN may remain the underdog in the telecoms equipment selling business, its fight-back could result in the end of other, rival firms -- such as Paris, France-based Alcatel-Lucent with its financial problems, which could ultimately help NSN secure larger contracts over others.
Alcatel-Lucent, after abysmal third quarter results, is reportedly in financing talks with investment bank Goldman Sachs, after the firm warned it may have to sell off assets and lose thousands of employees as it bids to conserve cash.
But first for NSN is to handle its scandal. Improving the firm's profitability won't happen overnight. The firm will continue to cut jobs -- around one-quarter of the firm's staff -- in a bid to head back into the black, and will focus on financial health while planning its break to another lucrative market.
"The key is to be patient and play the long game," Suri said.