Strong 5G demand spurs Nokia business

Photo: EPA Pekka Lundmark

Finland's producer of mobile phones and wireless solutions Nokia announced key internal restructuring to place emphasis on sales of equiptment for 5G networks as demand for next generation communications is booming worldwide, AP reported. Nokia aims to take a leading role in that market under its new CEO Pekka Lundmark who vowed to introduce a new model of management in the company.

Nokia reported net profit of 539 million euros for the April-June period, up 71% from 316 million euros a year earlier. Sales were up 4% at 5.3 billion euros.

Lundmark has drastically changed the business strategy, said the second-quarter results showed the company was on the right track. “We are already seeing the benefits of our new operating model, which helped us to deliver such a strong financial performance,” Lundmark said. The executive has vowed to make Nokia the world leader in 5G - the new generation of broadband technology - even if it means sacrificing short-term profitability. In 5G technology, Nokia is in a race with Ericsson, Huawei and Samsung.

Lundmark said Nokia has revised its full-year profit outlook upwards and “we now expect comparable operating margin between 10 and 12% for full year 2021, compared to our previous range of 7-10%.”

“We have executed faster than planned on our strategy in the first half, which provides us with a good foundation for the full year,” he added. Lundmark acknowledged, however, that Nokia faced “headwinds” in markets like the United States ,where the company has lost market share. Challenges also loom in China, where Nokia’s market share has remained low despite the company recently securing an important 5G deal with key operator China Mobile.

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