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Nokia pins hopes on pivotal role in long 5G peak

Nokia fleshed out its business turnaround plan, with CEO Pekka Lundmark (pictured) challenging the company to elevate itself into a position to shape next-generation access technology and connected enterprise opportunities as 5G hits its potential.

In an stock market announcement made hours before the start of its Captial Markets Day today (18 March), the executive asserted because 5G was in its early phase, the company still had opportunity to lead on the technology, despite admitting on several occasions Nokia had fallen behind rivals.

Among the segments cited for significant growth was the digital enterprise market, as he tipped modern connectivity to help “drive massive productivity, efficiency and safety gains across industries”.

“We estimate that the peak of the 5G market will last roughly twice as long as it did with 4G,” he added. “So these trends of next-generation access and digital connected enterprise still have a long way to run. I want Nokia be able to shape them, delivering best-of-breed products, services and connectivity that allow our customers to deliver constantly improving performance.”

Business reset
Nokia noted it was in the process of a complete overhaul of its business, including cutting costs, with a view to becoming more competitive from 2022 and refocusing on growth in key segments.

In the short-term, the Mobile Networks division is being shaped to secure a leadership position in 5G and other emerging technologies, while being part of wider attempts to reset Nokia’s cost base and “renewing ways of working”.

From 2022, the vendor aims to increase margins through a number of measures including digitisation of its own operations, increased automation and taking emerging market opportunities.

Moving beyond that, the company will focus on developing new use cases and business models, including for enterprises and private wireless.

“Nokia is repositioning itself to deliver sustainable, profitable growth, adapting our business to lead in an increasingly digitalised world,” Lundmark said. “We have a clear and detailed plan for how we will reset the business, accelerate competitiveness and scale up our lead in the markets we choose to play in.”

Margin improvements
The moves are part of a sweeping plan to revive the business hatched by its relatively new CEO.

Earlier this week the vendor announced thousands of job cuts, fresh climate targets and several partner and customer deals.

Each of its revamped divisions has been set financial targets, a move designed to increase individual accountability and improve transparency across the business.

Its Mobile Networks unit was tasked with achieving an operating margin of between 1 per cent and 2 per cent this year, increasing to between 5 per cent and 8 per cent in 2023.

Across the whole business, Nokia aims to increase its margin from between 7 per cent and 10 per cent this year to between 10 per cent and 13 per cent in 2023. Mobile World Live

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