Nokia Announces Job Cuts of Up to 14,000 Due to Slower 5G Demand

Nokia Plans Workforce Reduction of Up to 14,000 Jobs Amid Declining Profits Due to Weaker 5G Demand

On Thursday, Finnish telecommunications giant Nokia disclosed its intentions to trim its workforce by potentially up to 14,000 employees. This move comes in response to declining profits attributed to a waning demand for its 5G equipment in North America.

Nokia’s recent financial performance fell significantly below expectations, creating a sense of uncertainty regarding its future outlook. Atte Riikola, an analyst at the equity analysis firm Inderes, expressed his concerns, stating, “The earnings were much weaker than expected and the outlook is more uncertain. So it’s not looking that good in the short term for Nokia.”

Despite the challenges faced in the third quarter, Nokia expressed optimism about an anticipated “improvement in our network businesses in the fourth quarter.” However, Riikola believes that Nokia’s initial estimates may need substantial downward adjustments, suggesting a potential negative profit warning.

The competition for dominance in the 5G network arena, involving rivals such as Sweden’s Ericsson and China’s Huawei, has placed further pressure on Nokia. Consequently, Nokia’s sales dropped by 20 percent, totaling 4.98 billion euros during the third quarter of 2023.

Nokia had originally anticipated that the expansion of its 5G infrastructure in India would offset the slowdown in North American investments by telecom operators. Unfortunately, the company faced disappointment as the pace of 5G deployment in India moderated, making it unable to compensate for the decline in North America.

The economic downturn that has reverberated globally has also impacted the investments of mobile network operators, leading to decreased profitability for Nokia and Ericsson. These companies had initially benefited from increased demand during the COVID-19 pandemic but are now compelled to implement workforce reductions as the industry grapples with a slowdown.

Nokia’s announcement aligns with a broader trend of job cuts across the tech sector, with numerous major players taking similar measures this year. British telecom group BT, for instance, disclosed plans in May to eliminate up to 55,000 jobs by the end of the decade. Tech giants Meta and Microsoft have likewise unveiled intentions to reduce their workforces by potentially up to 10,000 employees this year. Earlier in the year, online retail giant Amazon announced layoffs affecting over 18,000 jobs globally, and Google’s parent company, Alphabet, confirmed cuts of around 12,000 positions.