Amid 5G slump, Nokia replaces CEO

Finnish telecom equipment maker Nokia Oyj is replacing its chief executive as it battles with China’s Huawei and Sweden’s Ericsson in the fight to provide 5G mobile networks around the world. The markets reacted positively to the development, with the stock rising 4.2% early on Monday, a Bloomberg report said.

Nokia’s board of directors has appointed Pekka Lundmark, the outgoing president and CEO of energy major Fortum, as president and CEO, a release said on Monday. He will take charge from September 1. Rajeev Suri, who has been president and CEO of Nokia and Nokia Siemens Networks for more than a decade, is stepping down at the end of August, but will continue to serve as an adviser to the board till January 1, 2021, Nokia said.

Suri had indicated to the board that he planned to step down sometime in the future provided a solid succession plan was in place, Nokia said. “After 25 years at Nokia, I wanted to do something different,” said Suri. “Nokia will always be part of me, and I want to thank everyone that I have worked with over the years for helping make Nokia a better place and me a better leader. I leave the company with a belief that a return to better performance is on the horizon and with pride for what we have accomplished over time.”

Under Suri, 52, Nokia has struggled to capture the 5G market, despite a ban on Huawei in the U.S. over security concerns. It has also reported weak results in recent quarters. Last October, Nokia suspended its dividend and cut its earnings guidance, thereby wiping 23% off the share price in a single day, reports said. According to Bloomberg, the past 12 months have seen the company lose about a third of its market value. Nokia lost the 5G race when it had problems developing proprietary chipsets just before it was to roll out its 5G network. This forced the Finnish company to buy expensive alternatives, eroding profits.

The announcement comes days after Bloomberg reported that Nokia was considering options including selling off a part of its business or potential mergers. And Lundmark has experience in striking large deals. At Fortum, he pushed through the $6.9-billion acquisition of German utility Uniper with the help of investors Elliott and Knight Vinke.

Lundmark has “consistently delivered robust total shareholder returns, successfully renewed the company’s strategy, and positioned it to be a strong player in the transforming global energy sector,” Nokia said in the release.

“With the acquisition of Alcatel-Lucent behind us and the world of 5G in front of us, I am pleased that Pekka has agreed to join Nokia,” Risto Siilasmaa, Nokia’s board chairman who will step down in April, said. “He has a record of leadership and shareholder value creation at large business-to-business companies; deep experience in telecommunications networks, industrial digitisation, and key markets such as the U.S. and China; and a focus on strategic clarity, operational excellence, and strong financial performance.”

Prior to Fortum, Lundmark served as president and CEO of Konecranes, a global material-handling technology leader, and from 1990-2000 he held multiple executive positions at Nokia, including vice president of strategy and business development at Nokia Networks.

“I am honoured to have the opportunity to lead Nokia, an extraordinary company that has so much potential and so many talented people,” said Lundmark. “Together we can create shareholder value by delivering on Nokia’s mission to create the technology to connect the world. I am confident that the company is well-positioned for the 5G era and it is my goal to ensure that we meet our commitments to our customers, employees, shareholders and other stakeholders. Strong values, leading innovation and unflinching commitment to our customers have always been core to Nokia and I want to put this even more at our centre as we move forward.”

Lundmark holds a Master of Science degree from Helsinki University of Technology and will be based in Espoo, Finland.

In India, Nokia is believed to be working with Vodafone Idea and Airtel on their 5G networks. Last year these two telecom companies had submitted their proposals for 5G trials to the government jointly with Ericsson, Nokia, Huawei, and ZTE. Reliance Jio, the other major operator, went with Samsung, but has recently sought permission from the government to use their own technology and design for the trials.