‘We make no profit on sales of mobile infrastructure,’ says Nokia CEO

‘We make no profit on sales of mobile infrastructure,’ says Nokia CEO

Pekka Lundmark Nokia.jpg

Nokia is making no profit on its mobile infrastructure sales and 2021 “will be challenging”, CEO Pekka Lundmark has admitted.

In a forthright presentation about what the company called its “refreshed strategy” after he replaced Rajeev Suri in mid-2020, Lundmark (pictured) said that Nokia’s Alcatel Submarine Networks (ASN) was “turning to profitability”.

He promised he and CFO Marco Wirén will give more details on the company’s capital markets day, set for 18 March 2021. The full-year results are due on 4 February.

Nokia is being divided into four groups, mobile networks, network infrastructure, cloud and network services, and technology, he said, with a “lean corporate centre, which will include a strategy and technology organisation that will “continually challenge the four business groups about what is possible”.

He warned that the company will consider disposing of businesses “where we cannot establish leadership”. There is “a rigid and selective approach to where to play and where not to play”, he added.

Nokia has a 27% market share in the both 4G and 5G markets — excluding China, he added. That puts it at number two, though he did not say whether Ericsson or Huawei was at number one.

The profit next year will be “around zero”, he repeated, with “longer term significant improvement”. But he warned of “quite strong margin pressure and price pressure, especially in North America”. Nokia this year lost a supply deal with Verizon to Korean rival Samsung.

Network infrastructure, separately from the mobile business and from the ASN submarine cable business, will see a 3% growth, he forecast. And cloud and network services “will see mid-single digit profitability”.

He said ASN is “an interesting segment” where “we are a leader in the whole world”, and is “turning to profitability”, though he did not give margin numbers. ASN’s business is increasingly “driven by webscale companies”, he noted.


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