'We don't have a 5G problem,' says Nokia's head of software

Helsinki

THE head of Nokia's software business Bhaskar Gorti defended the Finnish mobile network maker on Wednesday against market fears that it is lagging behind its peers Ericsson and Huawei in 5G development.

"I don't think we have a 5G problem," he told Reuters in an interview, calling its development a marathon where a lot of focus had been put on the first 10 minutes of the race.

Last month, Nokia cut its outlook for this year and next because of the need to step up its investments in 5G - news that knocked a third off its share price.

It also suspended dividend payments to conserve cash and pledged to hurry up the introduction of new 5G chipsets.

That was in sharp contrast to Sweden's Ericsson, which had lifted its market forecast for this year and its sales target for 2020 just a week earlier.

Nokia was wrong-footed by waiting for 5G radio standards to enter force late last year, while rivals were quicker to revamp products in anticipation of early rollouts in the United States and Korea, industry sources and analysts told Reuters.

Amit Hirchandani, sector analyst at Citi in London, calls Nokia a "show me" story in which it must demonstrate clear progress on fixing and deploying its 5G products in the coming months to restore investor confidence.

Mr Gorti said the 5G cycle consisted of several different parts, adding he believed Nokia to be ahead of its peers in aspects such as software development, Internet of things deployments or fixed wireless access.

"I personally think we have an at least two to three years or more lead on our nearest competitor Ericsson (in software)," he said.

The operating profit from Nokia's software business grew 108 per cent to 156 million euros (S$235 million) year-on-year in the third quarter, topping the profit from the company's long-time main business networks at 128 million euros for the quarter.

Mr Gorti said it was important to understand that 80 per cent of the mobile network is actually software and that the virtualisation of networks would only speed up for new 5G networks. REUTERS