The company said that sales in North America, its key market, have fallen by 40 per cent in Q3 and that it doesn’t expect a recovery any time soon.
The US, which is home to key customers like Verizon and AT&T, has been one of Nokia’s most profitable markets and this marked slowdown has meant that Nokia, along with Ericsson, has had to target other regions to drive growth.
One of those has been India, where Nokia saw strong growth in 2022, but now that market too is slowing.
As a result, Nokia is having to trim costs and is looking at savings of up to 1.2bn euros over the next couple of years. Consequently, employee numbers will tumble by 14,000 from the current 86,000, although the company did say that it would look to protect research and development.
The uncertainty in the telecom’s equipment market is expected to persist over the next 12 months, and while Nokia said that there would be a more normal seasonal improvement in its network businesses in the fourth quarter, it admitted that it had no idea when the market would see a full recovery.
The problems for Nokia suggest that the adoption of 5G is proving slower than many had expected.
For the likes of Nokia recovery could come via investment in faster mid-band equipment that will help with the growth in data traffic. At present only 25% of 5G base stations in the world outside of China have mid-band capacity which offers higher 5G speeds.
Unfortunately, many telecom operators started 5G deployment by using low-band gear that, while cheaper, only offers lower speeds.
While there are signs of increased demand for mid-band equipment it has yet to become a significant driver in a market that looks like it will experience an extremely tough few years.
