Nokia to cut 14,000 jobs amid dwindling sales

Nokia has announced significant job cuts as part of cost-reduction measures following a 20% drop in third-quarter sales due to weaker demand for 5G equipment.

The Finnish telecommunications giant plans to lay off up to 14,000 jobs and anticipates savings of €800 million to €1.2 billion by 2026.

Nokia shares fell by 2% at 0900 GMT.

The demand for 5G equipment, which was anticipated to usher in the age of automation and driverless cars, has not met expectations.

In the North American market, where Nokia experienced substantial sales, the company’s net sales plummeted by 40% during the third quarter.

“The market situation is really challenging, and it is witnessed by the fact that in our most important market, which is the North American market, our net sales are down 40% in Q3,” Nokia’s Chief Executive, Pekka Lundmark, said.

Declining sales

Nokia aims to reduce its employee base to a range between 72,000 and 77,000, down from 86,000, translating to around 16% job cuts at the high end.

The company’s executives emphasize the importance of not relying solely on market recovery but instead actively adapting to the evolving landscape.

“We continue to believe in the mid-to-long-term market, but we are not going to sit and wait and pray that the market will recover anytime soon,” Lundmark explained. “We simply don’t know when it will recover.”

To stimulate market recovery, Lundmark suggests that the industry needs to invest in faster mid-band equipment to manage the growing data traffic.

Currently, only 25% of 5G base stations outside of China have mid-band equipment, which offers higher speeds. Many telecom operators initially deployed cheaper low-band gear with slower speeds, but now there’s a growing recognition of the need for more advanced solutions.

In the third quarter, Nokia’s comparable net sales declined to €4.98 billion from €6.24 billion in the previous year, falling short of the estimated €5.67 billion, according to a poll by the London Stock Exchange Group.