Nokia restructuring – plans to cut 10,000 jobs within two years

Nokia cut jobs
The Nokia logo is seen on a smartphone in front of a displayed stock graph in this illustration taken February 5, 2021. REUTERS/Dado Ruvic/Illustration

STOCKHOLM (Reuters) – Finnish telecoms group Nokia said on Tuesday it planned to cut up to 10,000 jobs within the next two years to trim costs and invest more in research capabilities, as part of its restructuring plan.

After taking over the top job last year, Chief Executive Pekka Lundmark has been making changes in a bid to transform the company to better compete with Nordic rival Ericsson.

He announced a new strategy in October, under which Nokia will have four business groups and said the company would “do whatever it takes” to take the lead in 5G, as it banks on also capturing share from Huawei.

Lundmark is expected to present his long-term strategy, discuss action plans and set financial targets during the company’s capital markets day on Thursday.

The company said in a statement it expects about 600 million euros ($715 million) to 700 million euros of restructuring and associated charges by 2023.

“Decisions that may have a potential impact on our employees are never taken lightly,” Lundmark said in a statement. “My priority is to ensure that everyone impacted is supported through this process.”

Nokia expects the restructuring to lower the its cost base by about 600 million euros by the end of 2023. Half of the savings are expected to be realised in 2021.

These savings will offset increased investments in research and development and future capabilities and costs related to salary inflation, the company said.

In February Nokia forecast revenue to fall to between 20.6-21.8 billion euros ($25-26 billion) from 21.9 billion euros in 2020.

While both Nokia and Ericsson have been gaining more customers as more telecom operators start rolling out 5G networks, the Swedish company has got an edge partly due to it winning 5G radio contracts in China.

Nokia has not won any 5G radio contract in China and had also lost out to Samsung Electronics on a part of a contract to supply 5G equipment to Verizon.

($1 = 0.8389 euros)

(Reporting by Supantha Mukherjee; editing by Niklas Pollard)

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