Nokia to cut up to 14,000 jobs as part of cost base ‘reset’

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Nokia said it would slash up to 14,000 jobs as part of a cost-cutting programme as the Finnish telecoms equipment maker’s customers scale back spending.

The group said on Thursday it was targeting cost cuts of up to €1.2bn by 2026 as it laid out plans to reduce its workforce to between 72,000 and 76,000, down from the 86,000 it currently employs.

A combination of higher interest rates and slower global growth prompted its customers to retrench, Nokia said. The group’s third-quarter sales fell by a fifth to €5bn.

The move to remove costs from the business follows a profit warning this month from Swedish rival Ericsson, which announced it would deepen its own restructuring plans.

Both companies had hoped the recent introduction of 5G networks would boost sales and profits, but apart from some early adopters, the technology has not proved the catalyst the Scandinavian operators need.

“The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia and we will support everyone that is affected by this process,” said Pekka Lundmark, Nokia’s chief executive.

“Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness,” he added.

Nokia’s underlying operating margin declined by 2 percentage points to 8.5 per cent in the quarter, prompting the company to push back to 2026 its deadline for hitting an operating margin of 14 per cent.

It reiterated its outlook for the year, which it had already cut in July. Sales were likely to come in at the lower end of its forecast of €23.2bn-€24.6bn while its underlying operating margin would be at the midpoint of its 11.5-13 per cent range.

Despite the drop in third-quarter sales, Nokia said it should see “a more normal seasonal improvement in our network business in the fourth quarter”.

Alongside the cost cuts, Nokia said it would also give its individual businesses greater “operational autonomy” as well as “streamlining our operational model”.

This week, Ericsson declined to give any guidance for next year, pointing to doubts over the strength of demand for telecoms equipment.

The Swedish group also announced a $2.9bn impairment charge — equivalent to half the acquisition price — on the purchase of Vonage, the signature deal of its chief executive Borje Ekholm.

Ericsson’s boss is under pressure after revelations that the group could have paid terrorist group Isis in Iraq led to action by US regulators and a big share sell-off.