Finnish telecommunications giant Nokia’s announced plans to cut 9,000 to 14,000 jobs worldwide by the end of 2026 to cut costs. The decision comes after the company reported a 20% decline in sales in the third quarter due to reduced demand for 5G equipment, especially in North America. Nokia’s It aims to deliver savings of between €800 billion and €1.2 billion by 2026, citing challenges from high inflation, rising interest rates and reduced customer spending.

Nokia’s strategic change: Cutting costs amid uncertainty in the 5G market

CEO Pekka Lundmark emphasized the need to invest in networks developed with cloud computing and artificial intelligence. However, due to uncertainty regarding the market recovery, Nokia prefers to take serious cost-cutting measures. The first cuts will save the company €400 million in 2024 and €300 million in 2025.

CEO Pekka noted that decisions affecting employees are the most difficult decisions. He recognized Nokia’s talented workforce and provided support to those affected by the upcoming changes. Despite the challenges, he remains optimistic about Nokia’s future possibilities.

Nokia was once the world’s leading mobile phone maker, but it has struggled to keep up with the rise of smartphones such as the iPhone and Samsung Galaxy. Nokia focused on telecommunications equipment after selling its phone division to Microsoft, which was later sold to HMD Global. In 2020, Nokia became BT’s main equipment supplier after the UK restricted Huawei’s access to 5G networks.

Even so, 5G equipment manufacturers face challenges as operators in the US and EU cut costs. This affected not only Nokia but also its Swedish rival Ericsson, which reported a decline in sales.

Commenting on unexpected challenges in the telecommunications sector, Kester Mann, an analyst at CCS Insight, said demand for services remains strong but questions continue to arise regarding the long-term future and interest of operators. Additionally, many tech companies, including Meta and Amazon, are laying off workers due to economic problems, but 80% of large tech employees affected found jobs within three months.