Nokia lowers 2026 profit margin target, wins Deutsche Telekom contract
FINNISH telecom equipment maker Nokia said on Tuesday (Dec 12) it had revised down its comparable operating margin target to at least 13 per cent by 2026 from at least 14 per cent previously, after losing a deal with a US telecom carrier.
Nokia said it still sees a path to achieving the previous target, but considering current market conditions in its mobile networks business, it deemed the revision prudent.
The company took a hit after AT&T chose Ericsson to build a telecom network using a new cost-cutting technology called open radio access network (Oran) that will cover 70 per cent of its wireless traffic in the US by late 2026.
“AT&T is bad news, we are of course admitting it,” Nokia chief executive Pekka Lundmark said in an interview, adding that it was a customer-specific situation, fairly financially driven and not technology or performance driven.
“We are not seeing this spreading to other customers,” he said.
Separately, Nokia and Deutsche Telekom (DT) announced a deal on Tuesday to use Oran in Germany, marking a return of the Finnish company into DT’s commercial networks.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“We have been out of that network since 2017 and now we are making a comeback there through Oran technology, so that is a significant win for us,” Lundmark said.
The project is already under way and will be extended from the first quarter of next year.
Nokia also plans to revamp its mobile networks business by lowering its cost base to achieve a double-digit operating margin on sales of 10 billion euros (S$14.5 billion) by 2026. It would need about 11.5 billion euros of sales to reach that level.
Nokia in October said it would cut up to 14,000 jobs to reduce costs, warning it did not expect any immediate market recovery after posting a 20 per cent drop in third-quarter sales on weaker demand for 5G equipment. REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Telcos, Media & Tech
Indonesia’s Vidio is aiming to double subscribers ahead of IPO
Google’s payments to Apple reached US$20 billion in 2022, antitrust court documents show
Qualcomm forecast beats estimates as AI drives chip sales in China
eBay forecasts Q2 revenue below estimates as consumer spending remains strained
Huawei lab barred by US regulators as part of crackdown on China
Apple set for big sales decline as investors await AI in iPhones