- Mobile sales declined 25% year-over-year, to €1.97 billion ($2.15 billion)
- Nokia expects sales to rebound in Q4 and into 2025.
- Nokia is looking to its $2.3B Infinera acquisition to help turn the business around
Hard times aren’t stopping for Nokia, which saw sales decline by 18% year-over year in its second quarter, reported Thursday. But at least this was a little better than the previous quarter, when the company saw net sales decline by 20%.
Nokia also adjusted its net sales guidance for the full year. In its Network Infrastructure business, the company revised its net sales planning assumption down to -2% to 3%, compared with the previous 2% to 8% growth. And in its Mobile business, Nokia revised net sales to -14% to -19%, down from the previous -10% to -15%.
India drives wireless down sharply
Nokia reported sales in its Mobile business of €1.97 billion ($2.15 billion) for the quarter, down 25% year over year, largely driven by a big decline in India, making for difficult comparables this quarter. “Q2 last year marked the peak of their 5G rollout,” said Nokia CEO Pekka Lundmark on today’s call. Almost three quarters of Nokia’s massive revenue decline was attributable to India, he said.
However, the Finnish vendor is expecting sales to start to rebound in Q4 this year, continuing into 2025. For now, however, the dark days continue.
Nokia got a €150 million ($164 million) boost from the resolution of an outstanding contract with AT&T in the U.S. this quarter. In December, AT&T dropped Nokia as its radio access network supplier in favor of rival Ericsson. Nokia’s AT&T revenue would be “largely stable year-on-year in 2024 and approximately halved in 2025,” Nokia CFO Marco Wirén said. Nokia’s base stations will populate the AT&T network for many years to come, Nokia noted.
Lundmark also highlighted Nokia’s RAN deal with operator Meo in Portugal in Q2. Nokia will replace Huawei as the radio supplier for the carrier.
Looks to Infinera to drive growth
Nokia’s Network Infrastructure business reported net sales of €1.52 billion ($1.66 billion) for Q2, down 11% from the year-ago quarter.
Recently, Nokia announced the planned divestment of its Submarine Networks business to the French state and also its intention to acquire Infinera, the North American optical networking company.
“The Infinera acquisition will significantly increase the scale and profitability of our optical networks business,” Lundmark said on Thursday’s earnings call. “It will enable us to deliver faster innovation for customers and expand our position with webscale and regionally in North America.”
He said, “Fixed networks continues to be well positioned to benefit from strong demand in the fiber market. This is evident in markets where fiber is not yet highly penetrated and in more mature markets where customers are starting to upgrade to XGS-PON or 25G PON.”
Lundmark added, “We had good orders actually in Fixed Broadband in Q2, particularly in North America, which is a promising sign because we received now the first BEAD-related orders in North America, some of which will be already supporting Q4 revenue. Of course, the BEAD will be much more a 2025, 2026 story.”
And India is not all bad news for Nokia. Although India’s 5G slowdown hurt Nokia, the company’s Network Infrastructure unit also does business in India, and that business will start paying off soon. Lundmark said Nokia has a fixed wireless access (FWA) contract in in the country “that will start delivering significant revenues in Q4.”
The company is continuing to implement a cost savings program that it announced in October 2023. It has already cut more than 6,000 jobs, largely in the Mobile sector. “At the end of June our headcount was just under 80,000,” Lundmark said. Nokia will continue to shrink its workforce through 2026. The CEO expects to helm a company with between 77,000 to 72,000 employees by the end of 2026.