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A Look at Nera Telecommunications Ltd’s Revenue Streams and Its Future

It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business Nera Telecommunications Ltd (SGX: N01), or NeraTel for short, is involved in and how it generates its revenue.

Nera Telecommunications Ltd, as a quick background, is a communications and network solutions provider with over 38 years of experience. Currently, it has a presence in more than 16 countries in Asia-Pacific and the MENA (Middle East North Africa) region.

The annual report of the firm can clue us in on the business segments the company has, and the revenue raked in by each segment.

Let’s take a look at the table below for the revenue contribution of each segment for the financial year ended 31 December 2016 (FY2016):

Source: Nera Telecommunications Ltd Annual Report 2016

Revenue for the Telecommunications segment comes from providing wireless infrastructure networks, end-to-end solutions and services in the wireless space.

Its wireless infrastructure network portfolio covers “in-building solutions, outdoor coverage enhancement, RF access network optimisation, benchmarking, 3G/LTE base stations, licensed and unlicensed point-to-point and point-to-multi-point microwave”.

Meanwhile, the Infocomm segment provides a full range of products, solutions and services for cloud network infrastructure, network security, IP networks, optical networks and broadcast networks.

Going forward, revenue growth for the telecommunications segment may be hampered by competition. The firm said:

“The Group believes that the demand for microwave radio transmission products and services will continue to be mainly driven by mobile operators’ investments in upgrading their existing networks. However, competition in the mobile industry will continue to intensify as operators are driving towards lower capex and opex spending. In addition, major global wireless equipment vendors are also competing aggressively against us, resulting in intense price competitions in all markets.”

However, the company may be able to ride on the trends in the digital arena. It added:

“In the Infocomm space, we expect to see robust growth led by advances and innovations in mobile services, social networking, cloud and e-commerce. We are also seeing a renewed focus on network security solutions with the recent spate of high-profile cyberattacks and network security breaches. We will continue to build up our range of IP network infrastructure solutions and capabilities to better support our customers in both existing and new strategic markets.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.