Outgoing Nokia CEO Rajeev Suri (pictured) defended its progress selling 5G kit, pointing to an expected deal with China Unicom covering supply of part of its core next-generation network in an apparent attempt to take emphasis away from missing other lucrative deals in the market.
In the company’s Q1 earnings call, Suri said he was “quite optimistic” on winning a part of China Unicom’s 5G core contract. Contrary to media reports, it is yet to receive official notification on the deal.
He added the company was taking a “prudent approach” to pursuit of market share in the country and had focused its 5G RAN products on features required globally, targeting “markets with better economics and avoid[ing] specific local requirements”.
He went even further on a call with media, and is reported to have told journalists that “a return to 5G radio at some point in the future is not out of the question but our approach has consistently been prudent.”
Suri claimed the vendor would “remain a meaningful player in China” given its 4G installed base and prospects related to 5G with operators in areas including fixed, IP routing and optical networks. It also plans to pursue opportunities with large enterprises in the country.
The comments come after a double blow in the region, as it missed out on China Mobile’s massive 5G tender and the suppliers list for a joint deployment by China Telecom and China Unicom of a standalone RAN. Both of these were announced after the close of the quarter.
During Q1, net sales in China dipped 29 per cent year-on-year, and made up 6 per cent of the company’s total compared with 9 per cent in Q1 2019 (for more analysis on Nokia’s China challenges, see this blog).
Nokia added 5G momentum was continuing, with 70 commercial deals signed by today (30 April) and 21 live networks. Stripping China out of figures, it expects to maintain its 2019 market share of 27 per cent of the 4G and 5G radio market.
Across its network and software businesses, Nokia added “pursuing market share in China presents significant profitability challenges and the region has some unique market dynamics”.
Across its business, Nokia booked a Q1 loss of €100 million compared with a €442 million loss in Q1 2019. Net sales fell 2 per cent to €4.9 billion.
Removing one-off items, restructuring charges, impairments and continued costs related to the integration of Alcatel-Lucent, Nokia said it would have made a net profit of €33 million.
Issues related to Covid-19 (coronavirus) cost it around €200 million in sales, largely attributed to supply chain problems.
It expects a greater impact from the pandemic in the current quarter and stood by a prediction H2 would be the strongest period of 2020.
In addition to negative headlines about its performance in China, so far in 2020 Nokia faced questions on the future direction of the company with reports of potential asset sales and the announcement Suri would be replaced at the helm at the start of September.Subscribe to our daily newsletter Back