Nokia, the Finnish telecommunications giant, has announced plans to cut between 9,000 and 14,000 jobs by the end of 2026 in a bid to reduce costs. This decision follows a 20% drop in sales reported for the period between July and September. The decline in demand for 5G equipment, particularly in markets like North America, has been cited as a major factor behind this workforce reduction.
As of now, Nokia employs approximately 86,000 people worldwide, and the company has undergone several rounds of job cuts since 2015. Nokia’s cost-cutting efforts are aimed at achieving savings of €800 million to €1.2 billion (£695 million to £1 billion) by 2026.
Nokia’s CEO, Pekka Lundmark, emphasized the need for substantial investments in networks with improved capabilities due to advances in cloud computing and artificial intelligence. However, he also acknowledged the uncertainty surrounding market recovery and the necessity for decisive action.
The company’s cost-cutting plan includes a goal of reducing costs by €400 million in 2024 and €300 million in 2025. Despite the ongoing uncertainties, Nokia expects an improvement in its network businesses in the current quarter.
Nokia, once the world’s leading handset manufacturer, shifted its focus to telecoms equipment after failing to anticipate the popularity of internet-enabled touchscreen phones like the iPhone and Samsung Galaxy. In 2020, Nokia benefited from Huawei’s exclusion from the UK’s 5G networks by becoming BT’s largest equipment provider.
However, 5G equipment manufacturers have faced challenges as operators in the US and the EU reduce spending. Nokia and its Swedish rival, Ericsson, have sought to counter this weakness with increased sales in India. Still, the rollout of 5G has also been slowing down in that market.
Earlier this week, Ericsson reported a decline in sales and announced layoffs, stating that the uncertainty affecting its business would persist into 2024.