Finnish telecommunications giant Nokia has announced plans to cut between 9,000 and 14,000 jobs globally by the end of 2026 in an effort to reduce costs. This decision came after the company reported a 20% decline in sales during the third quarter, attributing the slump to decreased demand for 5G equipment, particularly in North America. Nokia aims to save between €800m and €1.2bn by 2026, citing the challenges posed by high inflation, rising interest rates, and reduced spending by its customers.
Nokia’s Strategic Shift: Cost-Cutting Amid 5G Market Uncertainties
CEO Pekka Lundmark highlighted the need for investments in networks improved by cloud computing and AI. However, due to uncertainties in market recovery, Nokia is opting for decisive cost-cutting measures. Initial reductions will save the company €400m in 2024 and €300m in 2025.
CEO Pekka expressed that decisions affecting employees are the toughest. He acknowledged Nokia’s talented workforce and ensured support for those impacted by the upcoming changes. Despite challenges, he remains optimistic about future opportunities for Nokia.
Nokia was once the world’s leading mobile phone manufacturer but struggled with the rise of smartphones like the iPhone and Samsung’s Galaxy. Post selling its handset division to Microsoft, which was later sold to HMD Global, Nokia pivoted to focus on telecoms equipment. In 2020, after the UK restricted Huawei from its 5G networks, Nokia became BT’s primary equipment provider.
Despite this, 5G equipment manufacturers have been facing challenges as operators in the US and EU reduce spending. This has affected not only Nokia but also its Swedish competitor, Ericsson, which also reported sales declines.
Kester Mann, an analyst at CCS Insight, commented on the surprising struggles of telecoms, stating that while the demand for services remains high, questions about the long-term future and relevance of operators continue to emerge. Furthermore, many tech companies, including Meta and Amazon, have been making redundancies due to economic challenges, although 80% of affected big tech workers found employment within three months.
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(Via)
