SEOUL: Nokia announced a major overhaul of its business Thursday that includes slashing up to 14,000 jobs, or about 16 per cent of its workforce, over the next three years.
The company employs 86,000 people and said the “reset” would reduce its costs by as much as €1.2 billion, or roughly $1.3 billion. It made the announcement as it reported a 20 per cent decline in sales and a 69 per cent dive in profits in the most recent quarter, from July through September, compared with last year.
“In the face of a challenging market environment, we will reduce our cost base to protect our profitability,” the company’s CEO, Pekka Lundmark, said in a video statement.
Nokia once led the global mobile phone market, but it quickly fell behind the iPhone, which Apple released in 2007. Nokia sold its mobile phone division to Microsoft in 2013. Since then, it has focused on selling the back-end infrastructure of telecom systems to wireless companies, cable operators and other business buyers.
Nokia said “macroeconomic uncertainty and higher interest rates continue to pressure” its customers. The company has also been struggling after losing out on market share in 5G technology to rivals in China, said John Strand, a telecom analyst in Copenhagen, Denmark. Chinese companies, led by Huawei, control nearly half the global 5G market.
Nokia halted sales in Russia in March 2022 after Russia’s invasion of Ukraine. At the time, the company had been selling equipment to MTS, Russia’s largest telecom service provider. Documents obtained by The New York Times revealed that Nokia had been enabling a Russian surveillance system for almost a decade.
Nokia isn’t the only Western telecom group to face cuts. One of its main competitors, Sweden’s Ericsson, has also laid off thousands of employees this year because of lower demand for its products and services.
“Nokia’s problems are pretty much the same across Western operators,” Strand said. “They are hit by increasing energy prices, inflation and interest.” - The New York Times
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