ESPOO - Nokia (HE:NOKIA) is bracing for a potential decline in earnings after AT&T (NYSE:T), one of its key customers, announced plans to transition toward Open Radio Access Network (Open RAN) with multiple vendors over the next five years. This shift could impact Nokia's Mobile Networks' net sales; AT&T accounted for 5-8% of Mobile Networks' YTD net sales in 2023.
Despite this challenge, Nokia maintains a strong position in the global non-China 5G market, holding a 29% share as of the third quarter, according to the Dell'Oro Report. This success is attributed to significant investments in research and development (R&D), particularly through Nokia Bell Labs' innovations.
To counterbalance the expected loss from AT&T's pivot, Nokia has planned cost reduction measures aimed at sustaining profitability. However, these measures might result in a delay in achieving their double-digit operating margin goals by up to two years.
AT&T will continue its relationship with Nokia for wireless and wireline services, including microwave radio links. NTT DOCOMO has also recently selected Nokia's O-RAN solutions for deploying their commercial network, which underscores the Finnish company’s commitment to leading in R&D and Open RAN technology.
Nokia's CEO Pekka Lundmark reaffirms the company's strategic direction focused on growth and market leadership amid evolving network demands. He asserts that despite the current challenges, Nokia is dedicated to adapting and maintaining its course for expansion and profitability.
Further insights into Nokia’s strategies will be shared during the Investor Progress Update on December 12th in Espoo, Finland. Interested parties can join the event via webcast to learn about future paths for Mobile Networks and Cloud/Network Services as Nokia navigates through these industry changes.
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