He said the deal “does not reflect the technological competitiveness (Nokia) has achieved with our products as evidenced by our significant increase in RAN market share in recent years.”
Lunmark believes Nokia has the right strategy in place for its mobile networks business, with opportunities to gain share, diversify its business and achieve a double-digit operating margin longer-term.
Net sales for Q4 across Nokia’s business units were down 21% for Q4. In mobile networks, net sales declined 17% on a reported and 14% on a constant currency basis, attributed to declines in North America, India and Europe.
Earlier this week Ericsson reported similar Q4 woes as investment levels returned to a “normalised level” in India, which had been rolling out 5G at an unprecedented pace from the summer of 2022.
Europe net sales reflected slower 5G deployments amid ongoing macroeconomic uncertainty. In North America demand was impacted by customers' depletion of inventories and prioritisation of cash flow.
Ericsson cited the same reasons for a Q4 dip in North America, but spurred on by the AT&T deal, it anticipated a recovery in 2024.
Nokia cited “the early impact of a recently communicated customer purchasing decision,” as another reason for its performance in Q4.
“In mobile networks, we expect top line challenges in 2024 related to a more normalised pace of investment in India and the AT&T decision,” Lundmark said.
Nokia also revealed that cost saving plans are in place to counter the 2024 top-line challenges.
2024 has already started with the structural changes to its sales teams and autonomous business units implemented. The company said it is on track for €400 million in-year gross savings in 2024.
“Encouragingly we saw improvements in our gross margin across several of our businesses which, combined with continued cost discipline, helped us to deliver a strong comparable operating margin of 14.8%,” Lundmark said.
“We do expect further improvement in gross margin and then in the second half (of 2024) we will start to see more benefits from our cost savings program”.
Nokia also attributed a favourable product and regional mix to its gross margin in mobile networks, with a shift towards software and growth in sales in Asia-Pacific (excluding India), the Middle East and Africa.
In other news, Nokia’s enterprise sales now represent over 10% of the groups revenue and its network infrastructure business saw increased demand towards the end of 2023, indicating a shift in spending patterns heading into 2024.
