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Nokia (NYSE:NOK) announced solid Q4 2014 results on Thursday, January 29, as the company easily beat market estimates on the back of robust global LTE spending and improved profitability in its Networks business. Networks sales increased by 8% year-over-year (y-o-y) on a constant currency basis to EUR 3.4 billion ($3.85 billion), driven by soaring Mobile Broadband sales which offset weakness in Global Services. In other businesses, the global mapping division HERE saw net sales grow 15% y-o-y to EUR 255 million ($289 million), and the Intellectual Property (IP) licensing division Nokia Technologies reported a 23% y-o-y increase in sales to EUR 149 million ($169 million) on account of higher income from certain licensees including Microsoft (NASDAQ:MSFT). Interestingly, even after the overall strong results, the company’s stock was down about 3% through Thursday on lower than expected sales growth in Nokia Technologies and a smaller dividend payout. ((Q4 2014 Press Release, Nokia, Jan 29 2015)) [1] [2]

Driven by growth across divisions, Nokia’s overall operational sales grew 9% y-o-y to EUR 3.8 billion ($4.3 billion) in the quarter. On the cost side, the adjusted operating margin (non-IFRS) improved by 200 basis points over the prior year quarter and 10 basis points sequentially to 13.8%, owing to some high-margin LTE deployments in the quarter. Looking at its progress in maintaining profitability along with top line gains, the company maintained its operating margin estimate for Networks to be in the range of 8-11% for 2015. For its HERE division, Nokia raised its operating margin estimate from 5-10% to 7-12% for full year 2015 on the back of “positive industry trends” and its own focus on improving cost efficiency.

Our $8 price estimate for Nokia is about in line with the current market price.

See our complete analysis for Nokia stock here

Networks Drives Sales, Profitability

The sale of the handset business made Networks (formerly NSN) the biggest contributor to Nokia’s value, accounting for almost half of its total value by our estimates. Before being promoted as Nokia’s CEO, Rajeev Suri headed the Networks division for the company. At the helm of NSN, Suri is credited with turning the division around to sustained profitability on the back of a big restructuring program that cut its operating expenses by EUR 1.35 billion and increased its focus on mobile broadband. However, the transition took a toll on Nokia’s top line, which declined by 17% year-over-year in the first quarter last year as the company exited unprofitable service contracts, primarily in EMEA and Latin America.

In the second quarter, the company reversed much of its top line losses by banking on higher LTE spending across geographies, especially Greater China and Asia-Pacific. Excluding the impact of divestitures, contract exits and currency fluctuations, Nokia’s Q2 Networks revenues actually grew by 1% y-o-y – an improvement over the decline of 6% in the previous quarter and 12% in Q4 2013.

Banking on new contract wins amid rising global LTE spending, the company changed gears in the third quarter with robust 15% y-o-y top line gains in the Networks division, driven by 33% y-o-y sales growth in Mobile Broadband. Networks sales in North America grew 53%, likely due to LTE network deployment by Sprint (NYSE:S), and sales in Greater China improved 38% on increased LTE spending in both Taiwan and China, especially by the world’s largest carrier, China Mobile (NYSE:CHL).

Nokia repeated its strong Networks performance in the fourth quarter with 13% y-o-y growth in Mobile Broadband and a return to positive sales growth in Global Services. Mobile Broadband sales were driven by strong sales growth in North America (95%) and modest growth in Europe, Middle East and Africa. It is important to note that Q4 sales figures show Networks’ strong dependence on developed markets for growth. The company reported y-o-y declines in Networks’ sales in emerging markets such as Greater China and Latin America in the quarter and its growth in other emerging markets such as Vietnam, Myanmar and India was offset by lower network deployment in Japan. There is a need for Nokia to realign its focus on emerging markets considering that markets such as Asia, Africa and Latin America are likely to drive growth in the global telecom industry going forward. Of overall Networks sales of EUR 3.65 billion in Q4 2014, Mobile Broadband contributed 52% of the total against 47% contributed by Global Services.

Going forward, rising 4G LTE deployment activity should help improve revenues further. Nokia has done well in winning LTE contracts with China Mobile and China Telecom, and has emerged as one of the leading foreign players in the Chinese LTE buildout. Although European sales have been slow to recover, the deal pipeline looks strong as carrier spending returns amid improving macroeconomic conditions. In Europe, Nokia won two large LTE contracts with Everything Everywhere and Vodafone, which should help stabilize revenues in the fourth quarter. The company’s contract win at Sprint is also likely to boost revenues in the near term, with the carrier likely to splurge on its Spark program now that its initial LTE layout is complete.

HERE Sales Show Robust Growth

HERE, Nokia’s mapping and location intelligence business, saw operational sales grow by 15% y-o-y on the back of rising sales to automobile customers and higher revenue realization from services offered to Microsoft. Sales to automobile customers represents over 50% of total HERE sales and its growth in the quarter was aided by a 22% rise in sale of map data licenses for the HERE embedded navigation systems.

Nokia has made several interesting deals in the last couple of quarters to make its HERE unit more personalized and intuitive and boost the long term potential of its mapping business. The Finnish company acquired artificial intelligence firm Desti towards the end of May last year and announced its plans to buy predictive analytics company Medio Systems in June. Nokia also launched a $100 million Connected Car Fund around the same time to identify and invest in companies which can help grow HERE’s location and mapping ecosystem in the automotive space. [3] [4] [5] According to our estimates, HERE currently contributes less than 3% of the company’s valuation but its potential for future growth is immense considering the rising demand and growing penetration of intelligent location and mapping services, especially in autos and smartphones.

Nokia provides its map data to 80% of all car-navigation systems in the world and several major enterprises including Amazon (NASDAQ:AMZN), Yahoo (NASDAQ:YHOO) and Microsoft. [6] In fact, Microsoft is going to be one of Nokia’s biggest customers in the short to medium term with its four-year licensing deal to use HERE on its mobile devices. We expect the recent acquisitions and investments to help the company lay a solid foundation for its long-term growth and attract customers going forward.

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Notes:Q4 2014 Presentation, Nokia, Jan 29 2015 []Nokia Q4 2014 Earnings Transcript, Seeking Alpha, Jan 29 2015 []Press Release- Desti Acquisition, Nokia, May 30 2014 []Press Release- $100m fund, Nokia, May 5 2014 []Press Release- Medio Acquisition, Nokia, June 12 2014 []Nokia to Buy Medio for Analytics Data in Map Push Against Google, Bloomberg, June 12 2014 []
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Somerset Maslak IstanbulCapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited (Ascott), has secured a contract to manage its first serviced residence in Turkey. Ascott’s entry into Turkey will expand the footprint of the world’s largest international serviced residence owner-operator to 90 cities across 25 countries.

Ascott’s first serviced residence in Turkey, Somerset Maslak Istanbul is slated to open in 2016. It has a prime location in one of Istanbul’s main business and leisure districts. It will be part of an integrated development, Maslak 1453, which comprises a 1,453-metre long shopping promenade and 24 towers of commercial, residential, dining and recreational facilities. Ascott, which pioneered luxury branded serviced residence with the opening of its first property in Singapore in 1984, has been awarded the management contract for Somerset Maslak Istanbul by real estate company Maslak Konaklama, an affiliate of the Saudi-based Abduljawad Group of Companies.

Maslak is one of Istanbul’s main business and leisure districts comprising major banking and financial institutions, as well as key educational institutions such as Istanbul Technical University. Istanbul’s most prestigious mall, Istinye Park, is a 15-minute walk from the serviced residence. Somerset Maslak Istanbul will have excellent connectivity with close proximity to Buyukdere Street, the Trans-European Motorway connection and the Istanbul Technical University metro station. Guests will be spoilt for choice with the variety of restaurants and retail outlets in Maslak 1453.

The serviced residence will offer guests and their families an ideal home away from home. Its range of warm and stylish studios to four-bedroom apartments each comes with a fully-equipped kitchen, wireless internet connection and separate workspace and living area. For the perfect balance between work and play, guests can enjoy an array of amenities such as a swimming pool, fitness gymnasium, restaurant, residents’ lounge and children’s playroom designed to cater to their individual lifestyles.

Mr Lee Chee Koon, Ascott’s Chief Executive Officer, said: “Turkey is an attractive market for foreign investors and we see significant growth opportunities for international branded serviced residences. The country is amongst the world’s top 20 largest economies. It has a strategic location at the crossroads of Europe, Middle East and Asia, a large domestic market and stable policy environment. As the financial hub of the country, Istanbul is a natural choice for multinational corporations setting up headquarters in Turkey. Tourism is also a significant contributor to the country’s GDP. Visitor numbers have been seeing double-digit growth in the past three years and tourism revenue has been increasing steadily.”

Mr Lee added: “Ascott is delighted to partner with Abduljawad Group, one of the largest conglomerates in Turkey with an extensive portfolio of properties in various parts of the world. Through this partnership, we will bring our award-winning Somerset brand of serviced residences to Turkey. In 2014, Ascott added eight new cities to our global portfolio. We entered Greater Sydney in Australia; Taiyuan, Yinchuan and Changsha in China; Bali in Indonesia; Vientiane in Laos; Yangon in Myanmar and Busan in South Korea. We expect strong demand from expatriates and business travellers for our first serviced residence in Turkey and will continue to bring Ascott’s signature hospitality to more places around the world.”

Mr Ehsan Abduljawad, Chairman of Abduljawad Group, said, “We are extremely pleased to enter into this management agreement with Ascott, which is internationally renowned for its brands, management and service excellence. We are confident that Somerset Maslak Istanbul’s balanced living concept, with its spacious, expertly furnished apartments and personalised services will meet the demand for high quality serviced apartments in Istanbul.”

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Posted by on in Business
Japanese firms seek business link with Myanmar
Some 12 Japanese firms have sought business links with Myanmar counterparts in four areas, a semi- official media reported Friday.

At a business matching held in Yangon, the Japanese firms looked for potential partners in the areas of manufacturing, information technology, logistics and services in the Southeast Asian country.

More than 140 Myanmar small and medium enterprises (SME) were listed to exchange talks with the Japanese counterparts, the report said.

The event was organized by the Japan-Myanmar Economy and Investment Center and the SME Development Department of Myanmar's Ministry of Industry.

According to official statistics, there are 40,000 registered SMEs in Myanmar, while the number of the unregistered ones is estimated at over 60,000.

Meanwhile, two Japanese firms, KDDI Corporation and Sumitomo Corporation, have chosen to invest a total of two billion US dollars in Myanmar's telecommunication sector to help the state- owned tele-enterprise expand network.

A memorandum of understanding on the move has been signed with Myanmar's Ministry of Communications and Information Technology in Nay Pyi Taw.

Japan is also helping Myanmar in development of mobile communication and postal service sectors by providing technical support in these areas.

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Myanmar reneges on effort to free political prisoners

One of the clearest markers of progress on human rights improvements in Myanmar has been the release of hundreds of political prisoners by the government of President Thein Sein since 2011. That progress has reversed starkly over the past year, as dozens of activists and protesters have been imprisoned.

The government took another major step backwards last week when it sidelined prominent human rights defender Ko Bo Kyi and his organisation from a committee charged with resolving the remaining cases of political prisoners.

The joint secretary of the Assistance Association of Political Prisoners-Burma (AAPPB), Bo Kyi has been a consistent critic of the government for decades, having endured over eight years of imprisonment in Myanmar, followed by 14 years in exile advocating around the world for the release of the more than 2,100 activists.

The Remaining Political Prisoner Scrutiny Committee was established by the Myanmar government in early 2013, in part to fulfill a pledge to US President Barack Obama made during his visit to Myanmar in November 2012. The committee includes presidential office ministers, former political prisoners like Bo Kyi, and members of key political parties. The committee met several times and was largely responsible for a series of amnesties that reduced the number of prisoners to a few dozen. Committee members estimate that 354 prisoners were freed. Bo Kyi was allowed back into Myanmar and established an office of the AAPPB. The committee was viewed as a successful, if strained, example of a rapport between the government and civil society to overcome decades of distrust and resolve cases of writers, journalists, activists, students and politicians imprisoned because in one way or another they opposed the military regime.

By early 2014, President Thein Sein claimed there were no more political prisoners. This was not only inaccurate — but came at a time when the authorities were again busy charging dozens of activists who were seeking to exercise new-found freedoms of expression and peaceful assembly, creating new political prisoners. The committee's chair, the president's office minister and key adviser U Soe Thane, threatened to dissolve the committee because it demanded the government take action to stem the rising number of arbitrary arrests.

Last week the committee was effectively dissolved, with hardliners appointed in the place of people like Bo Kyi and former political prisoner U Nyo Tun. In its place is a 28-member body renamed the Prisoner of Conscience Affairs Committee. The new chairman is Brig Gen Kyaw Kyaw Tun, deputy Minister for Home Affairs, a ministry that is effectively under the military's control. It also includes senior officials from Special Branch, the director-general of the General Administration Department, and the Department of Corrections, all of which have been key actors in past arrests, intimidation and harassment of political activists and their families. Some former political prisoners remain on the new committee, such as Ko Ko Gyi of the 88 Generation Peace and Open Society Group, as do a dozen representatives of major political parties, including prominent ethnic parties, but they are a weakened group among a core of hardline government officials.

AAPPB's recent report estimates that 81 political prisoners remain behind bars, including a small number of prisoners from before 2013, and those recently jailed. Dozens of farmers have been imprisoned for protests over the accelerating nationwide scourge of land-grabs by business and the military. A whopping 203 people are awaiting trial, mostly for participation in public protests. In the past two months the government has arrested a number of student activists protesting the proposed national education bill after they staged small, sporadic demonstrations and marches in Yangon. A dozen people, part of a larger group who had their land in Yangon seized by the army in 1992 and had maintained a small and peaceful protest camp in downtown Yangon outside the old Supreme Court building, were also arrested under the criminal code for allegedly obstructing the sidewalk.

Bo Kyi's exclusion from the new committee and replacing U Soe Thane with security officials are clear signs of a stalled reform process. The creation of new political prisoners and the recent arrests indicate that, while there is substantially more space for dissent than in the past, the government is becoming less and less tolerant of critical voices. This gradual squeeze on peaceful protest harkens back to the dark days of military rule when peaceful protest or expression was not tolerated. The difference is that this new backpedalling is more subtle, targeting less-prominent critics, and with more of an eye on an international community that has embraced the government of Thein Sein with a premature repeal of sanctions, increased assistance to the government, and incautious investment.

Former political prisoners say they do not understand why concerned governments have not reacted more strongly to the failure of the political prisoner committee to complete its work and, more important, the large number of new cases. Excluding voices such as Bo Kyi's and others who have suffered in the past are signs of serious backsliding. Now is a critical moment for President Obama and key countries like Japan, the UK, France, Germany and members of Asean to let President Thein Sein and other Myanmar officials know that their support depends on a renewed commitment to a reform process that relegates political prisoners to a bygone era.

David Scott Mathieson is a Senior Researcher in the Asia Division of Human Rights Watch

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Human traffickers abuse and kill, say Rohingya asylum seekers

Since 2012, more than 100,000 stateless Rohingya Muslims have fled violence and poverty in Myanmar. ― File pic























Since 2012, more than 100,000 stateless Rohingya Muslims have fled violence and poverty in Myanmar. ― File picBUKIT MERTAJAM, Jan 29 ― Abul Kassim, a Rohingya asylum seeker, was snatched from his home in the northern Malaysian state of Penang on January 12. The next morning, his beaten and bloodied body was found.

That day, police moved on the 40-year-old's alleged killers. Raiding a house in the neighbouring state of Kedah, they rescued 17 Rohingya migrants being held against their will, according to a statement by Penang police.

Eight alleged traffickers from Malaysia, Myanmar and Bangladesh were arrested.

The murder of Abul Kassim casts rare light on what Rohingya activists say is widespread abuse by human traffickers in Malaysia, who are willing to use extreme methods to protect their lucrative but illegal business.

Abul Kassim regularly supplied police with information on the activities of traffickers, said Abdul Hamid, president of the Kuala Lumpur-based Rohingya Society in Malaysia.

Since 2012, more than 100,000 stateless Rohingya Muslims have fled violence and poverty in Myanmar. Most travel in traffickers' boats to Thailand, where they are held by traffickers in squalid jungle camps before a ransom is paid.

Relatively wealthy Malaysia to the south is the destination for most Rohingya who flee. For some, it is far from safe.

Relatives and witnesses told Reuters of three abductions in Penang in 2013 and 2014, from a home, a coffee shop and the street. In addition, a Rohingya man was confined and tortured after being brought by traffickers through Thailand.

Three of the four cases ended in murder, they said.

Fortify Rights, a Southeast Asia-based rights group, documented another three suspected killings of Rohingya by traffickers last year.

Banned from legally working and fearful of police harassment, few victims bring their case to authorities. Those who do say police have taken little action.

Confirming cases is difficult. Local media give the issue little coverage and Penang state police did not respond to further questions about Abul Kassim's killing. National police spokeswoman Asmawati Ahmad did not reply to Reuters' questions on that case or other suspected Rohingya murders.

Interviewed by Reuters in late 2014, Penang police chief Abdul Rahim Hanafi denied traffickers had killed any Rohingya in the state that year.

“We are not safe”

Police quoted in the local media said Abul Kassim's killing was likely to be connected to a money dispute.

A Kuala Lumpur-based Rohingya leader, who declined to be named for fear of retribution, said quantifying crimes was difficult due to the power and reach of traffickers in northern Malaysia.

“If we try to get information about the traffickers, they will simply target the person who tries to get information. We are not safe,” he said.

Such cases include the alleged abduction and murder of Rohingya cousins Harun and Sayed Noor in 2013 and 2014, according to witnesses interviewed by Reuters.

Harun, 35, had his first run-in with traffickers in early 2013, when he was kidnapped from a Penang shop and held for a week for a ransom of 7,000 ringgit ($1,942), recalled his uncle, Mohammad Salim, 50.

After his release, Harun lodged a complaint with police and fled into hiding, Salim said.

In retaliation, traffickers took his cousin Sayed Noor, aged about 30, and held him as barter for Harun and 50,000 ringgit, Salim said. Several months later, Sayed turned up dead, his body showing signs of torture and mutilation.

In early 2014, the traffickers caught up with Harun.

Months later, his uncle, Salim, received a call from a Thai mobile number, telling him to leave town.

“The trafficker told me himself he had killed Harun.”

A similarly chilling message was sent with the alleged murder last March of Sadek Akbar, 17, who had travelled from Myanmar with the help of traffickers.

After passing through a Thai camp and being ransomed for release, Sadek was imprisoned in a safehouse in Penang. Traffickers then demanded RM2,000 for Sadek's release, his uncle, Altaf Hussain, told Reuters.

“We couldn't afford it, so they beat him to death and dropped him by the side of the road,” Altaf, 48, told Reuters.

Altaf's account of retrieving the body from hospital was verified by another Rohingya witness and a Malaysian journalist, who both declined to be named.

“Millions of dollars”

Hampering a full account of the problem is Malaysia's patchy record of protecting millions of migrants, including nearly 150,000 registered refugees and asylum seekers living there.

Relatives of victims are reluctant to report crimes to police, fearing months of detention for migration violations and shakedowns for bribes, according to Fortify Rights executive director Matthew Smith.

“There are millions of dollars being made through the trafficking of Rohingya. It's unsurprising that illicit profits of that magnitude would bring out violent behaviour,” he said.

The United Nations High Commissioner for Refugees (UNHCR) declined to comment on specific criminal cases, but has received “regular reports of abuse, intimidation and exploitation of Rohingya refugees,” said spokeswoman Yante Ismail.

“Under Malaysian law, all refugees are treated as undocumented and illegal migrants, and there is no national system in place to provide them with protection.” ― Reuters

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Friday, January 30, 2015
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