Nokia to cut 14,000 jobs in an attempt to salvage falling profit

Telecom giant Nokia has announced it will be cutting up to 14,000 jobs, a decision it blamed on the slowing demand for 5G equipment.

On Thursday, the company reported that its third-quarter net sales declined by 20% year-on-year, with profit over the same period dropping by 69%. Nokia said that as a result, it will be implementing cost-cutting measures to try and save between $842 million and $1.2 billion by 2026, eliminating $422 million worth of costs in 2024 and a further $316 in 2025.

“The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia and we will support everyone that is affected by this process,” said President and CEO Pekka Lundmark in a statement. “Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness. We remain confident about opportunities ahead of us.”

A Nokia spokesperson said the company was now beginning the process of consultation on initial reductions, declining to comment on which job functions would be impacted by the layoffs, or whether the layoffs would affect Nokia’s global workforce or employees in specific geographic regions.

“The timing and detail of final reductions will be decided only after careful consideration and will depend on the evolution of end market demand,” the spokesperson said.

Nokia is not the only telecoms company to have announced layoffs this year. The company’s biggest rival Ericsson laid off 8,500 employees in February and this week announced it had seen a fall in sales and that it expected the uncertainty affecting its business to persist into 2024. In May, BT Group announced plans to cut 55,000 jobs, the same month Vodafone said it would be cutting 11,000 positions.

5G technology faces adoption challenges

While private 5G/LTE networks for the enterprise are becoming increasingly common, several headwinds exist for the technology, which could impact adoption rates over the next two years, a report from market research firm IDC published in July noted.

It outlined three factors that had slowed the growth of private cellular: slower-than-expected availability of the latest 5G chipsets, difficulties with integrating private cellular into existing network infrastructure, and the way in which private cellular is sold.

“For the market to scale faster globally, and for vendors to capture more profits, we foresee the need for a traditional enterprise channel to develop whereby a larger portion of the equipment is pushed to market via distributors and value-added resellers,” the report said.