Telecom Equipment

Nokia expects 5G network sales to pick up in second half

April 25, 2019

Nokia today announced that its revenue rose 2 percent to 5.032 billion euros and operating loss of 524 million euros during the first quarter of 2019.

Nokia has generated revenue of 3.944 billion euros (+4 percent) from Networks, 543 million euros (flat growth) from Software and 370 million euros (+1 percent) from Nokia Technologies during the first quarter.

Nokia has generated revenue of 4.207 billion euros from communication service providers, 260 million euros from Enterprise and 370 million euros from licenses.

Nokia CEO Rajeev Suri said: “5G network revenues are expected to grow sharply, particularly in the second half of the year, driven by our 36 commercial wins to date.”

Huawei, the main rival of Nokia, said recently that it has won 40 commercial contracts for deploying its 5G network globally.

Rajeev Suri indicated that competitive intensity has slightly increased in certain accounts as some competitors seek to be more commercially aggressive in the early stages of 5G. Some customers are reassessing their network vendors in light of security concerns, creating near-term pressure but longer-term opportunity, Rajeev Suri said.

There is no clarity about the aggressive telecom network makers in the global 5G network market. Both Ericsson and Samsung are adding 5G network deals. Huawei, despite facing security related allegations, signed several 5G contracts.
Nokia said it could not recognize approximately 200 million euros of sales — related to 5G deliveries mainly in North America. Some of its telecom operator clients did not roll out 5G mobile in line with the expectation due to lack of readiness of the 5G ecosystem.

Nokia’s Networks business reported gross loss of 254 million euros. Nokia’s gross profit fell 15 percent to 1.641 billion euros primarily due to Networks, which was negatively affected by broad-based gross margin erosion in Mobile Access.

Nokia’s sales fell in all regions in Q1 2019 as compared with Q4 2018.
Nokia generated 30 percent of its total sales from Europe, 28 percent from North America, 19 percent from Asia Pacific including India, 9 percent from Greater China, 8 percent from the Middle East and Africa and 6 percent from Latin America.