Nokia, a Finnish company that manufactures telecom equipment, announced on Tuesday that it has reduced its comparable operating margin objective to at least 13% by 2026, down from at least 14%. This was done due to the company’s failure to secure a contract with a telecom provider in the United States.
However, considering the current market conditions in its mobile network sector, Nokia has determined that the change is reasonable. The company has stated that it still sees a way to attain its original aim.
After AT&T (T.N.) selected Ericsson (ERICb. S.T.) to construct a telecom network utilizing a new cost-cutting technology known as open radio access network (ORAN), the firm saw a decline in its stock price. This decision will cover seventy percent of the company’s cellular traffic in the United States by the end of the year 2026.
“AT&T is bad news; we are admitting it,” Nokia chief executive Pekka Lundmark said in an interview. He said the problem was “customer-specific” and primarily financially driven rather than by technology or performance.
“We are not seeing this spreading to other customers,” claimed the executive.
On Tuesday, Nokia and Deutsche Telekom (D.T.) (DTEGn.DE) announced a partnership to utilize ORAN in Germany. This agreement signifies the return of Finnish business to D.T.’s commercial networks.
“We have been out of that network since 2017 and now we are making a comeback there through ORAN technology, so that is a significant win for us,” according to Lundmark.
The undertaking is already in progress and is scheduled to be expanded in the first quarter of next year.
In addition, Nokia intends to restructure its mobile network business by reducing its cost base to reach a double-digit operating margin on sales of 10 billion euros ($10.78 billion) by 2026—achieving around 11.5 billion euros in revenue to achieve that level of sales.
After announcing a 20% reduction in third-quarter sales due to reduced demand for 5G equipment, Nokia said in October that it would remove up to 14,000 positions throughout the company to reduce costs. The company also warned that it did not anticipate a fast market rebound.
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