Nokia has announced that it will cut between 9000 and 14,000 jobs by the end of 2026 to reduce its costs.
The Finnish vendor recently registered a 69% drop in net profit during Q3, with a 20% drop in sales between July and September this year. Nokia is aiming to save between €800 million and €1.2 billion by end-2026, targeting a saving of €400 million in 2024 and €300 million the following year. To achieve this, it will reduce its 86,000-strong workforce by as much as 16%.
Nokia’s Chief Executive Pekka Lundmark said: “given the uncertain timing of the market recovery, we are now taking decisive action”, adding that despite “ongoing uncertainty” Nokia expects “an improvement in our network businesses” in this quarter. He noted that “significant investments in networks that have vastly improved capabilities” would be required to keep up with advancements in cloud and AI.
Nokia cited reduced demand for 5G equipment – particularly in North America – as a major factor in the need for downsizing. Rival Ericsson also saw massive layoffs earlier this year, with some of their core markets such as the US and EU beginning to wind down their 5G network deployments. Both vendors have gained ground in India by taking advantage of the country’s ban on Chinese-made network equipment, but 5G deployments are slowing in this market as well.
India of course was not the only market to ban Chinese network equipment, with the US, UK and many developed markets opting to avoid vendors such as Huawei and ZTE over security concerns. This pushed the Chinese vendors towards emerging markets, where 5G deployments are building steam rather than winding down.
Nokia and Ericsson were almost inarguably beneficiaries of the western ban on Chinese equipment, as it allowed them to continue selling in more lucrative markets – but this was arguably a short-term boon for them given that 5G deployments were already well underway. As they begin to decline, the foothold that Chinese vendors now have in emerging markets may not see the Scandinavian vendors frozen out of these growth markets, but will certainly put them on the back foot.