Nokia posts weak network profits, sees market decline

Updated / Thursday, 26 Oct 2017 07:49

Nokia said its network sales fell 9% in the third quarter to €4.8 billion

Nokia has today reported weaker-than-expected quarterly earnings from its mainstay networks gear business, saying the market had turned more challenging and that it is set to decline in 2018. 

The telecom network equipment industry is weathering the toughest part of a decade-long cycle as demand for 4G and older 2G and 3G network equipment subsides.

But volume contracts for next-generation 5G networks remain a few years out. 

Nokia's network sales fell 9% in the third quarter to €4.8 billion while operating profit dropped 23% to €334m. 

Analysts' average forecasts in a Reuters poll were €5 billion and €432m respectively. 

The Finnish company estimated a 4-5% networks market decline for full-year 2017, compared to a previous forecast of 3-5% and a 2-5% year-on-year fall for 2018. 

"That decline is the result of the multiple technology transitions underway; robust competition in China; and near-term headwinds from potential operator consolidation in a handful of countries," the company's chief executive Rajeev Suri said. 

Swedish rival Ericsson last week reported its fourth consecutive loss-making quarter. 

Nokia's total profit in the quarter, however, jumped 20% to €668m above all analyst forecasts due to a one-off payment of €180ms from a settled patent arbitration with LG Electronics. 

Nokia also said it would pay a dividend of 19 cent per share from this year, up from 17 cent in 2016, and that it would buy back some more shares by the end of this year.