Nokia Plans to Cut 14,000 Jobs to Slash Costs

Nokia plans to reduce costs by between €800 million and €1.2 billion by the end of 2026 with a loss of up to 16% of its workforce. The vendor announced job cuts on a conference call after revealing it booked a 69% drop in Q3 net profit.

The company said it planned to move quickly on the cost reduction program with €400 million of savings targeted for 2024 and a further €300 million the following year. Along with trimming its 86,000-strong headcount, Nokia plans to make several organizational changes including giving more operational autonomy to its individual segments and reallocating sales staff to separate divisions.

Nokia noted its bid to reset its cost base was an attempt to better position the company for longer-term growth and enable it to navigate the current market uncertainty. It added the exact scale of the program would depend on the evolution of end market demand with the move expected to deliver savings on a net basis but the magnitude will depend on inflation. Cuts are expected to primarily impact its Mobile Networks and Cloud and Network Services divisions, alongside internal corporate functions.

“Nokia still believes in the mid to long-term attractiveness of our markets. Cloud Computing and AI revolutions will not materialize without significant investments in networks that have vastly improved capabilities. However, while the timing of the market recovery is uncertain, we are not standing still but taking decisive action on three levels: strategic, operational, and cost,” said Nokia President and CEO Pekka Lundmark

Nokia revealed a fall in profit and revenue in Q3. The results were attributed to macroeconomic uncertainty and higher interest rates continuing to pressure operator spending. Its Mobile Networks division booked a year-on-year drop in sales of 19% to €2.2 billion, blamed on moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America.

Its operating profit from the unit fell from €278 million in 3Q22 to €99 million in the most recent quarter. This took it from the company’s segment with the highest operating profit to its third, behind Network Infrastructure and Nokia Technologies. Across the whole business, revenue was down 20% year-on-year to €5 billion, with profit down 69% to €133 million.