Nokia to cut 14,000 jobs amid 5G sales decline

Layoffs in Nokia: Finnish telecom giant Nokia announced a major cost-cutting effort involving up to 14,000 job cuts in response to a 20 per cent decline in third-quarter sales, primarily attributed to slowing demand for 5G equipment. This slowdown is notably prominent in the United States, pushing Nokia to boost sales in the low-margin Indian market. The company aims to achieve savings of €800 million to €1.2 billion by 2026, as it targets a long-term operating margin of at least 14 per cent by that year.

Nokia's restructuring initiative is anticipated to result in a reduction in its workforce from 86,000 to a range of 72,000 to 77,000 employees. The company has committed to swift action in this cost-saving program, with €400 million in-year savings expected in 2024, followed by an additional €300 million in 2025.

This move parallels Nokia's rival, Ericsson, which has also resorted to layoffs in response to the ongoing uncertainty in the 5G equipment market, and Ericsson expects this uncertainty to persist until 2024.

Nokia's third-quarter net sales declined to €4.98 billion from €6.24 billion the previous year, falling short of the estimated €5.67 billion, according to an LSEG poll.

As part of its cost-cutting strategy, Nokia plans to streamline its corporate centre to enhance strategic focus, safeguard investment in research and development, and delegate greater operational autonomy to its business units. Nokia's CEO, Pekka Lundmark, emphasised the necessity of resetting the cost base to adapt to market uncertainty while securing long-term profitability and competitiveness.

(With Reuters inputs)