Nokia is providing a mid-term update on its strategy. At a meeting with analysts the company will discuss the strategy for its four new divisions first announced in later October. More detailed targets will be presented at another analyst meeting 18 March.
The four new business groups, along with the unit 'Group Common and Other', are expected to be operational from the start of 2021. Nokia’s previously provided outlook for 2020 and 2021 remains unchanged, including a comparable operating margin of 7-10 percent in 2021.
Comparative results for the new divisions will be released by mid-March 2021. Today's meeting will focus on the strategy for each group. This is as follows:
- Mobile Networks’ immediate focus will be on executing its turnaround and regaining 5G leadership. It will focus on leadership in ORAN and vRAN, maintaining scale with operator customers and growing its private wireless networks business in the enterprise market. It is expected to reach breakeven at the adjusted operating level in 2021 and show "significant improvement over the longer term".
- Network Infrastructure (previously IP and Fixed Networks) will focus on the "building blocks and essential solutions of critical networks", including IP networks, optical networks, fixed networks and Alcatel Submarine Networks. It is expected to deliver a comparable operating margin in the high single digits in 2021 and gradual improvement over the longer term.
- Cloud and Network Services serves both service providers and enterprise customers with cloud-native software and as-a-service delivery models. Its adjusted operating margin is expected in the mid-single digit range in 2021, with "significant improvement over the longer term".
- Nokia Technologies is the IP licensing division, focused on monetising the company's patent portfolio. It is expected to deliver a slight improvement in comparable operating profit in 2021 and stable performance over the longer term.
- Group Common and Other, which predominately consists of corporate costs, is expected to be "run in a lean manner, with costs directly embedded into the business groups whenever possible", Nokia said. The unit is forecast to generate an adjusted operating loss of around EUR 200 million in 2021.
CEO Pekka Lundmark said the aim is to be a market leader in critical networks, whether that be for telecom operators, hyperscale web companies or enteprise. This builds on its strong position in open and virtualized radio access networks and the target for a 100 percent cloud-native software portfolio. "Customers are using a best-of-breed approach to build these networks, selecting network elements from multiple individual vendors who are able to offer the best performance per total cost of ownership," the CEO said, adding "Nokia is aiming to be the technology leader in the areas it chooses to play in."
