Nokia to cut jobs as US demand shrinks
Nokia cuts up to 14,000 jobs as 5G demand wanes
Nokia, the Finnish telecom equipment maker, is cutting up to 14,000 jobs, or 16% of its workforce, in a bid to reduce costs and weather a slowdown in demand for 5G equipment.
The company's third-quarter sales fell 20% to 4.98 billion euros, missing analysts' expectations, as demand for 5G equipment weakened in key markets such as the United States and India.
Nokia is targeting savings of between 800 million euros and 1.2 billion euros by 2026, and expects to reduce its employee base to between 72,000 and 77,000 employees, from 86,000.
CEO Pekka Lundmark said he wanted to protect research and development, but declined to give more details about the job cuts, saying the company must consult first with employee representatives.
The job cuts come as the telecom industry is struggling with slowing demand for 5G services. Businesses have been slow to adopt the new technology, and telecom operators have been struggling with their investment budgets as a result.
Earlier this year, Britain's BT Group announced plans to cut 55,000 jobs, while Vodafone has plans to cut 11,000 positions.
Lundmark said the industry needs to invest in faster mid-band equipment to help cope with the growth in data traffic. "Only 25% of 5G base stations in the world outside of China currently has mid-band," he said.
Mid-band equipment offers higher 5G speeds, but many telecom operators started their 5G deployment with low-band gear that is cheaper but offers lower speeds.
"There are signs here and there that demand would start to pick up again but it's too early to call it a broad-based trend," Lundmark said.
Nokia's job cuts are the latest sign of the challenges facing the telecom industry as it transitions to 5G. The company is hoping that the cost cuts will help it to weather the storm and emerge stronger in the long term.