Nokia has reported a sharp drop in quarterly earnings at its main telecom network gear business, warning that the market had turned more challenging due to tough competition in China and consolidation among wireless carriers.

Shares in the Finnish company dropped as much as 16 percent after it forecast the market, where it competes with China’s Huawei and Sweden’s Ericsson, would fall for a third straight year in 2018. The telecom network equipment industry is going through the toughest part of a decade-long cycle, as demand for 4G and older 2G and 3G network equipment subsides, while demand for next-generation 5G networks remains a few years away.

Nokia’s network sales fell nine percent in the third quarter to 4.8 billion euros (USD 5.7 billion), while operating profit in the business dropped 23 percent to 334 million.

 

 “Consolidation among wireless operators and fewer technology upgrades were hitting demand, while competition in China had toughened. The early positioning for 5G is well underway in that country and the cost of gaining or even maintaining footprint is significant. We want to ensure the right long-term footprint, but not at any cost. Operator consolidation and M&A activity are also creating some near-term headwinds. This is largely a North American issue.”

Rajeev Suri
CEO,
Nokia
Europe


Pre-budget Expectations 2018: Rajan S Mathews, Director General, COAI

 

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