Nokia reported widened losses in the opening quarter of 2019, though CEO Rajeev Suri remained confident of a sharp increase in 5G-related revenue in the second half of the year.
In its latest financial update, released a day after Suri urged the abandonment of confrontational rhetoric on 5G, Nokia warned near-term pressure on its results was partly due to commercial issues with 5G.
“Competitive intensity has slightly increased in certain accounts as some competitors seek to be more commercially aggressive in the early stages of 5G,” noted Suri, in what appeared to be a reference to rival Ericsson. He also noted that some customers have reassessed their vendors “in light of security concerns” (a reference to Huawei), “creating near-term pressure but longer-term opportunity.”
In fact, Suri suggested Nokia would be willing to lower its prices for the right deals: “We will continue to take a balanced view, and are prepared to invest prudently in cases where there is the right longer-term profitability profile.”
The company has signed 36 contracts related to 5G technology, it added, which it expects to drive improvements to its performance later in 2019. However, it also noted the expected weak first half of the year would place significant pressure on the remainder.
Nokia’s losses widened year-on-year in Q1, with a net deficit of €442 million compared with €354 million in the same period of 2018.
Net sales increased 2 per cent to €5 billion. Nokia added there was also €200 million of revenue from US 5G customers it was unable to book in Q1, but expected to be able to declare by the end of the year.
Its networks division recorded an operating loss of €254 million compared with a modest profit in Q1 2018; its software division slipped to a €7 million loss from a €1 million profit the prior year; and its technologies unit increased profit by 10 per cent to €303 million.
Nokia also said it was progressing well with a €700 million cost-cutting programme announced in October.Subscribe to our daily newsletter Back