STOCKHOLM – Finnish telecom gear group Nokia on Thursday said it will cut up to 14,000 jobs in a new cost reduction effort after third-quarter sales fell by a fifth, taken down by sales of next-generation 5G equipment.
Nokia and rival Ericsson have grappled with slowing demand for 5G equipment in markets such as the United States and the European Union, trying to offset some of the weakness with higher sales to India, a low-margin market.
Nokia is targeting savings of between €800 million and €1.2 billion (between S$1.16 billion and €1.74 billion) by 2026, the deadline by which it seeks to deliver a long-term comparable operating margin plan of at least 14 per cent.
The programme is expected to lead to an organisation with 72,000 to 77,000 employees, down from 86,000 today, the company said in a statement.
“Nokia expects to act quickly on the programme with at least €400 million of in-year savings in 2024 and a further €300 million in 2025,” the company said.
Ericsson, which has also laid off thousands of employees in 2023, said on Tuesday that the uncertainty affecting its business will persist into 2024.
“While our third-quarter net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter,” Nokia chief executive Pekka Lundmark said.
Nokia’s comparable net sales fell to €4.98 billion from €6.24 billion in 2022, missing the estimated €5.67 billion, according to a poll by the London Stock Exchange Group.
Nokia will move to a leaner corporate centre to boost strategic focus while protecting spending on research and development, and giving more operational autonomy to business units, it said.
“Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness,” Mr Lundmark said. REUTERS