Telecom Italia SpA will probably exclude Nokia Oyj from a mobile network upgrade and award the business to Ericsson AB and Huawei Technologies Co (華為), people familiar with the matter said.
Managers at Italy’s biggest phone carrier told Nokia that they are concerned that the equipment maker is lagging behind rivals on 5G, and that it would likely reduce its mobile network suppliers to two from three, said the people, who asked not to be named because the discussions are private.
Telecom Italia is seeking tenders for a three-year project that might be worth about 600 million euros (US$664.48 million), and is to decide on the award as soon as this month, the people said.
No final decision has been made and Nokia could still play a role as a mobile network supplier to Telecom Italia, the people said.
A spokesman for Telecom Italia declined to comment.
A spokeswoman for Nokia declined to comment on commercial negotiations, saying that the company continues to see solid momentum in its 5G business.
It has 48 commercial contracts and 15 live networks for the technology, including some of the world’s largest networks, she said.
Losing the work from Telecom Italia would be a setback for Nokia, which supplies about 30 percent of the carrier’s wireless gear and employs about 1,400 workers in the country.
The Finnish company is struggling to keep pace with its main rivals on 5G, and last month cut its profit expectations and suspended its dividend to boost research and development on the technology.
While the loss might be another sign that Nokia is stumbling on 5G, the symbolic significance of the loss could outweigh the direct financial hit — the contract is small relative to the Finnish company’s 11.3 billion euros of overall mobile equipment and service sales last year.
The tender is for work to improve Telecom Italia’s 15,000 radio access sites, including a buildout of 5G services at about 5,000 sites, the people said.
Ericsson supplies about 40 percent of the carrier’s mobile equipment and Huawei accounts for about 25 percent, they said.
Telecom Italia chief executive Luigi Gubitosi expects the move is going to help the company save money by enabling it to extract lower prices from its two suppliers, the people said.
This could help it tackle its 29 billion euro debt pile, one of the biggest in the European telecommunications industry.