Nokia to axe up to 14,000 jobs to lower costs

Finnish telecom giant Nokia is planning to slash up to 14,000 jobs across the U.S. and Europe as the company targets to lower its costs by the end of 2026. According to Nokia, the decision has been taken amidst dwindling global macroeconomic uncertainties. The company currently has 86,000 employees. The development comes as the company’s profit in the September quarter, declined by 69% year-on-year to 133 million euros. The company's sales during the quarter under review, also declined by 20% YoY to 4.98 billion euros.

"Nokia targets to lower its cost base on a gross basis (i.e. before inflation) by between EUR 800 million and EUR 1 200 million by the end of 2026 compared to 2023, assuming on-target variable pay in both periods. This represents a 10-15% reduction in personnel expenses," says the company.

Nokia expects to act quickly on the programme with at least EUR 400 million of in-year savings in 2024 and a further EUR 300 million in 2025. The programme is expected to lead to a 72,000-77,000 employee organisation compared to the 86,000 employees Nokia has today.

According to the company, the exact scale of the program will depend on the evolution of end market demand. The program is expected to deliver savings on a net basis, says the company. "The cost savings are expected to primarily be achieved in Mobile Networks, Cloud and Network Services and Nokia’s corporate functions. One-time restructuring charges and cash outflows of the program are expected to be similar to the annual cost savings achieved," says the company.

The job cuts are part of the company’s strategy to streamline operations. "The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia and we will support everyone that is affected by this process. Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness. We remain confident about opportunities ahead of us," says Pekka Lundmark, CEO and President, Nokia.

According to the company, as part of the strategy, Nokia plans to have a leaner corporate centre. "The company will continue its strong commitment to long-term research through Nokia Bell Labs," says Nokia.

Amidst the global headwinds, the company is taking decisive action on three levels: strategic, operational and cost, according to Lundmark. 

"First, we are accelerating our strategy execution by giving business groups more operational autonomy. Second, we are streamlining our operating model by embedding sales teams into the business groups and third, we are resetting our cost base to protect profitability. I believe these actions will make us stronger and deliver significant value for our shareholders," says Lundmark.