The Finnish telecommunications company, Nokia, is set to reduce its workforce by approximately 9,000 to 14,000 positions by the conclusion of 2026 as part of its cost-cutting measures.
This decision comes in response to a 20% decrease in sales reported between July and September. Nokia attributed this decline to a slowdown in demand for 5G equipment in regions like North America. The company presently employs 86,000 people globally and has already eliminated thousands of jobs since 2015.
Nokia aims to reduce costs by €800 million to €1.2 billion (equivalent to £695 million to £1 billion) by the year 2026. This decision stems from the need to make substantial investments in networks with significantly enhanced capabilities due to advancements in cloud computing and AI, according to CEO Pekka Lundmark.
He emphasized the need for these investments, but given the uncertain market conditions, the company is now taking decisive action. Nokia plans to swiftly cut costs by €400 million in 2024 and an additional €300 million in 2025. Mr. Lundmark expressed optimism that, despite ongoing uncertainties, there would be an improvement in the company’s network businesses in the current quarter.
Nokia, once the world’s leading handset manufacturer, failed to predict the surge in popularity of internet-enabled touchscreen phones like Apple’s iPhone and Samsung’s Galaxy, leading to its decline from the top spot in the market. After selling its handset business to Microsoft, which ultimately incurred a write-off by the software giant, Nokia refocused its efforts on telecommunications equipment.
In 2020, Nokia benefited significantly when Huawei was excluded from the UK’s 5G networks, securing a deal to become the primary equipment provider for BT. However, manufacturers of 5G equipment have faced challenges as telecom operators in the United States and the European Union reduced their spending.
Nokia and its Swedish competitor, Ericsson, attempted to compensate for this weakness by increasing sales in India. Still, the rollout of 5G technology in India also faced delays. Earlier this week, Ericsson reported a decline in sales and announced layoffs throughout the year, while highlighting ongoing business uncertainty extending into 2024.
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