Nokia has reported 18 percent drop in its sales during the second-quarter of 2024, indicating that telecom operators are yet to increase their Capex spending on network.
Nokia sales decreased 18 percent to €4.466 billion in Q2 2024 from €5.438 billion in Q2 2023.
INDUSTRY SEGMENTS
# Network Infrastructure €1,522 million (down 11%)
# Mobile Networks €1,970 million (down 24%)
# Cloud and Network Services €615 million (down 16%)
# Nokia Technologies €356 million (up 5%)
CUSTOMER SEGMENTS
# Communications service providers €3,591 million (down 21%)
# Enterprise €516 million (up 1%)
# Licensees €356 million (up 5%)
MAIN MARKETS
# Latin America €216 million (down 2%)
# North America €1,343 million (up 3%)
# Greater China €295 million (down 12%)
# India €329 million (down 69%)
# Rest of APAC €445 million (down 12%)
# Europe €1,366 million (down 11%)
# Middle East & Africa €473 million (down 1%)
CEO QUOTE
“The most significant impact was the challenging year-ago comparison period which saw the peak of India’s rapid 5G deployment with India accounting for three quarters of the decline,” Nokia CEO Pekka Lundmark said in the earnings report.
Nokia’s Network Infrastructure sales dropped 11 percent to €1.522 billion and it generated revenue of €586 million from IP Networks, €405 million from Optical Networks, and €532 million from Fixed Networks. Americas havae contributed revenue of €662 million, APAC €314 million and EMEA €546 million to Nokia’s Network Infrastructure business.
Nokia’s Network Infrastructure secured a number of important design wins. Nokia won important fiber deals, including in the US, and received orders from a US distributor for both Fixed and IP products as we gear up to supply operators under the BEAD program.
Nokia’s Mobile Networks sales fell 25 percent to €1.97 billion. Revenue from Americas €698 million, APAC million €602 and EMEA €670 million contributed to Nokia’s Mobile Networks business.
The sales decline in Mobile Networks was primarily driven by a decrease in India reflecting the fact that Q2 2023 represented the peak of the India 5G deployments. Positively, on a sequential basis, all regions increased compared with Q1.
Nokia’s Mobile Networks business is facing challenging as operators continue to be cautious. Nokia has won new customers such as MEO in Portugal, and increased its our footprint with existing customers.
AT&T
Nokia has resolved its outstanding negotiation with American telecom giant AT&T, who decided to proceed with rival RAN vendor Ericsson for commercial reasons.
Nokia will receive money from AT&T as part of its RAN-related contracts. Nokia has already received €150 million in Q2 as part of the resolution.
Nokia said it expects its sales in Mobile Networks to AT&T to remain largely stable in 2024 and then approximately half in 2025. Nokia will continue to look to win new opportunities with AT&T that can improve business in Mobile Networks and AT&T remains a significant customer for Nokia.
Vodafone Idea
In Q2 2024, Nokia India into an agreement with Vodafone Idea to settle outstanding dues and convert them to an equity stake in VIL. The impact of the transaction is expected to be visible in Nokia’s Q3 results and the equity stake is subject to a six-month lock-up period.
Nokia Technologies sales increased 7 percent to €356 million.
Nokia’s Cloud and Network Services sales declined 17 percent to €615 million with Americas contributing €197 million, APAC €149 million, and EMEA €268 million.
Nokia’s Cloud and Network Services are making progress with winning deals and with efforts to bring new API capabilities and orchestration automation to customers. Nokia signed Network as Code collaboration agreements bringing ecosystem total to 16, which includes agreements with operators such as Orange, Telefonica, and Turkcell along with ecosystem players Google and Infobip.
Baburajan Kizhakedath