News

Nokia steps away from Russia

Pekka Lundmark.jpg

The CEO of Nokia, Pekka Lundmark, has confirmed it will no longer operate in Russia in response to its invasion of Ukraine.

The news broke the day after Ericsson said it would pause its business in Russia indefinitely, with Lundmark telling Reuters: "We just simply do not see any possibilities to continue in the country under the current circumstances."

Nokia followed with a statement on the decision, which read: "For humanitarian reasons, Western governments have expressed concerns about the risk of critical telecommunication network infrastructure in Russia failing. They have also emphasized the importance of ensuring the continued flow of information and access to the internet which provides outside perspectives to the Russian people. Therefore, as we exit we will aim to provide the necessary support to maintain the networks and are applying for the relevant licenses to enable this support in compliance with current sanctions.

"This is the most responsible course of action for Nokia to take as we exit the Russian market," it continued.

Russia accounted for less than 2% of net sales in 2021 and does not expect an impact on its 2022 outlook. However, "we expect this decision to lead to a provision in Q1 of approximately €100m which will impact our reported but not comparable financials", Nokia said. Ericsson recorded a US$95.3 million provision in its Q1 2022 results for impairment of assets and other exceptional costs relating to its decision.

Developments over recent days will hit Russia's ambitions to boost domestic telecoms, technology and IT services.

In line with this, in November last year Nokia said it was a planning a joint venture with YADRO to build base stations across Russia. YADRO develops and manufactures telecoms equipment, including servers and storage systems and Russia.

The two were scheduled to begin building in December. In late February, immediately after Russia invaded Ukraine, Capacity enquired about the progress of the JV and was told: "We are monitoring the developments and will provide an update on this in due course".