Nokia has decided to reduce its cost base and increase operational efficiency and the programme is expected to lead to a 72,000 – 77,000 employee organisation compared to the 86,000 employees Nokia at present, the company said in a statement on October 19.

Finnish telecommunications’ plan to cut up to 14,000 jobs comes following a plunge in third-quarter earnings. The firm’s net sales declined 20% year-on-year to 4.98 billion euros and profit over the period plunged by 69% year-on-year to 133 million euros.

President and CEO Pekka Lundmark, said, “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.”

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“Nokia targets to lower its cost base on a gross basis (i.e. before inflation) by between 800 million euros and 1,200 million euros 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,” the firm said.

Sales from Nokia’s biggest unit by revenue, its mobile networks business, declined 24% year-on-year to 2.16 billion euros, with operating profit for the division diving 64% year-on-year.

However, Nokia has reiterated its long-term comparable operating margin target of at least 14% to be delivered by 2026.

Nokia expects to act quickly on the programme with 400 million euros of in-year savings in 2024 and a further 300 million euros in 2025, it added. “To address the market environment Nokia will reduce its cost base and increase operational efficiency while protecting its R&D capacity and commitment to technology leadership,” the firm said.

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Amid global headwinds and a slowing global economy, Nokia said the exact scale of the programme will depend on the evolution of end market demand. "The program is expected to deliver savings on a net basis but the magnitude will depend on inflation.

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,” it said.

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(Edited by : Jomy Jos Pullokaran)