Nokia to cut 14,000 jobs in €1.2bn restructure
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Telecoms giant Nokia is to cut up to 14,000 jobs in a restructuring that could cost up to €1.2bn.
The move will give Nokia’s four business groups with increased operational autonomy and agility. This will enable the business groups to diversify faster, build new ecosystem partnerships, implement new business models and invest for technology leadership. The first step is to fold the sales team back into the business groups.
This comes as the market recovery is slower than expected, despite the growth in 5G and AI as well as higher costs from inflation. The company says it will continue its strong commitment to long-term research through Nokia Bell Labs.
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“We continue to believe 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,” said Pekka Lundmark, president and CEO of Nokia.
“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. First, we are accelerating our strategy execution by giving business groups more operational autonomy. Second, we are streamlining our operating model by embedding sales teams into the business groups and third, we are resetting our cost-base to protect profitability. I believe these actions will make us stronger and deliver significant value for our shareholders.”
Nokia created the four P&L business groups in 2021 supported by a shared sales organization. Nokia will also move to a leaner corporate centre that will provide strategic oversight and guidelines for instance for financial performance, portfolio development, and compliance.
The aim is to cut the cost base by €800m to €1200m by the end of 2026, cutting staff from 86,000 to 72,000.
The exact scale of the program will depend on the evolution of end market demand and inflation, it says. The cost savings are expected to primarily be achieved in Mobile Networks, Cloud and Network Services and Nokia’s corporate functions.
“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. 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,” said Lundmark.
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