The headquarters of Nokia in Espoo on 19 October 2023. The Finnish network equipment maker announced this week it will terminate about 350 jobs in Finland, as part of a global, three-year campaign to reduce costs by up to 1.4 billion euros. On Tuesday, it was also reported that the company has lost out on a major equipment order from AT&T, the largest wireless network operator in the US. (Jussi Nukari – Lehtikuva)

Business
Tools
Typography

NOKIA on Tuesday announced it has completed its latest round of consultative negotiations and decided to terminate a total of 350 positions at its three branches in Finland: Espoo, Oulu and Tampere.

The number of job cuts is 97 lower than the network equipment manufacturer estimated at the start of the statutory negotiations in mid-October.

The cuts are part of a group-wide, three-year effort to reduce operating costs by 800–1,200 million euros, partly through the termination of 9,000–14,000 jobs worldwide. Nokia presently has a global staff of 86,000, over 6,000 whom are based in Finland.

The former mobile phone giant said people affected by the cuts will be offered the opportunity to participate in a programme intended to help them to find a new role within the company, outside the company or become self-employed.

Nokia has terminated almost 600 jobs in Finland in 2023, according to Helsingin Sanomat. Over the past three years, though, it has also brought in 1,400 new employees in the country, mostly to research and product development roles.

Losing AT&T order a major setback for Nokia

On Tuesday, it was reported that the network equipment maker lost out on a substantial order from the largest mobile network operator in the US, AT&T.

The decision is a major setback for Nokia, as evidenced by the six-per-cent tumble its shares had on the Helsinki Stock Exchange on Tuesday. Nokia stated that although its mobile networks business is expected to remain profitable in the coming years in spite of the decision, the decision could delay the timeline of achieving a double-digit operating margin for the business by up to two years.

AT&T has accounted for five to eight per cent, or 500–800 million euros, of the revenue of the mobile networks division in 2023. Nokia will continue to co-operate with the operator in other domains of network technology.

The US network operator instead placed the order with Ericsson.

The Swedish network equipment manufacturer has revealed that the value of the order is about 13 billion euros, adding that it will have a leading position in the development of the open radio access network of AT&T.

Reuters on Tuesday indicated that Ericsson opening up its proprietary interface may have been a key factor behind the decision.

“You’ve got to give them something that they really want and in return, we’re going to get something that not only AT&T but the entire industry wants,” Chris Sambar, director of networks at AT&T, summarised to Reuters.

Pekka Lundmark, the CEO of Nokia, said AT&T’s decision is disappointing but reminded that the mobile networks business has made “significant progress” in recent years, increasing its market share and technology leadership in radio access network.

“I firmly believe we have the right strategy to create value for our shareholders into the future with opportunities to gain share, diversify our business and improve our profitability,” he emphasised in a public comment on the vendor plans of AT&T.

Major investments in mobile networks, he reminded, are necessary to realise the artificial intelligence and cloud computing revolutions.

“AT&T’s decision is a nightmare for Nokia,” Sami Sarkamies, an analyst at Danske Bank, stated to Helsingin Sanomat on Tuesday. “[Nokia’s] products are currently competitive, and the company’s been a pioneer in open-access technology. Losing the order probably means that the management doesn’t have a good relationship with the network operator.”

He estimated that losing the order is such a major failure that it will likely lead to changes at the senior management of Nokia.

Also Kimmo Stenvall, an analyst at OP Financial Group, called attention to the significance of the development.

“Nokia has long contributed strongly to developing open radio access technology. AT&T’s decision to bypass it in a very significant investment is a very large setback for the company and will have an impact on the profitability of mobile networks [business] for a long time,” he commented.

Aleksi Teivainen – HT

Partners