Nokia to cut up to 14,000 jobs after 5G equipment sales drop 20%

In response to a significant third-quarter sales slump of 20 per cent attributed to sluggish 5G equipment sales, Nokia, the Finnish telecommunications equipment group, has unveiled an ambitious cost-cutting plan that includes slashing up to 14,000 jobs. This decision comes as Nokia grapples with challenges in crucial markets like North America.

The company aims to achieve savings ranging from 800 million euros ($842 million) to 1.2 billion euros by 2026, as it strives to reach its long-term target of a comparable operating margin of at least 14 per cent by the same year. According to a statement released by Nokia, this initiative is expected to transform the organisation from its current 86,000 employees to a more streamlined 72,000-77,000 workforce.

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"Nokia expects to swiftly implement this program, with at least 400 million euros in savings anticipated for the year 2024, followed by an additional 300 million euros in 2025," the statement noted.

Compared to the previous year, the third quarter witnessed a notable decrease in net sales, falling from 6.24 billion euros to 4.98 billion euros, missing the anticipated 5.67 billion euros as per an LSEG poll.

While acknowledging the challenges faced during the third quarter, Chief Executive Pekka Lundmark expressed optimism about a more typical seasonal improvement in the network businesses during the fourth quarter. Nokia plans to restructure its corporate center to provide strategic oversight and guidance, safeguard research and development spending, and grant more autonomy to its business units.

"Resetting the cost-base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness," Lundmark said.

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