Nokia CEO Rajeev Suri today explained the main reasons for the decline in the revenue of the telecom networking company during Q2 2016.

Nokia also announced that it will review the future submarine cable business that became a part of Nokia when it acquired Alcatel-Lucent.

Nokia today said its second quarter revenue totaled 5676 million euros or $6,326 million, clocking 9 percent dip on year on year basis and 2 percent increase on quarterly basis.

Nokia’s Networks business revenue was 5,228 million euros (-11 percent), while Nokia Technologies revenue fell 11 percent to 194 million euros in Q2 2016.

Nokia, which included revenue of Alcatel-Lucent after the merger in January 2016, made an operating profit of 332 million euros (–49 percent) or $370 million in Q2 2016.

Nokia posted net loss of 726 million euros or $584 million due to lower demand in mobile networks and a drop in overall revenue. Nokia said the loss compared with a profit of 338 million euros a year earlier.

Nokia generated 3,807 million euros (–11 percent) from Ultra Broadband Networks and 1,421 million euros (–12 percent) from IP Networks and Applications.

Nokia said its generated 21 percent revenue from Asia Pacific, 23 percent from Europe, 11 percent from Greater China, 7 percent from Latin America, 8 percent from Middle East & Africa and 30 percent from North America in Q2 2016.

The company said sales were weak in Mobile Networks within Ultra Broadband Networks, and accounted for approximately 80 percent of the overall decrease in Nokia’s Networks business. IP Networks and Applications also contributed to the decrease. This was partially offset by strong growth in Fixed Networks within Ultra Broadband Networks.

Rajeev Suri on result

According to Rajeev Suri, Nokia’s second quarter results were largely as expected and reflect solid execution in the midst of a challenging market and the ongoing integration of Alcatel-Lucent.

“We moved rapidly forward with our integration and cost savings efforts; saw robust growth in our Fixed Networks business; announced the acquisition of Gainspeed in order to accelerate our progress with cable operators; closed the acquisition of Withings; reached a licensing deal that will see the Nokia brand return to smartphones and tablets; and more,” Rajeev Suri said.

No improvement in near term

Rajeev Suri said the decline in Nokia revenue remains a concern, and reflects challenging market conditions. “While we do not expect those conditions to improve in the near term, we believe we are well-positioned given the scope of our portfolio, focus on operational discipline, strengthening sales execution, and opportunities in the evolution from 4G towards 5G,” Rajeev Suri said.

Nokia aims to increase its equity holding in Alcatel-Lucent to 100 percent from 95 percent.

“We are now targeting EUR 1.2 billion in total cost savings to be achieved in full year 2018. We have also continued the strategic review of our submarine cable business to determine the best long-term resolution for that business,” Rajeev Suri said.

Baburajan K
[email protected]