Day: October 19, 2023

Finnish telecom gear group Nokia (NOKIA.HE) will cut up to 14,000 jobs to reduce costs, it said on Thursday, after weaker demand for next-generation 5G equipment lowered third-quarter sales by a fifth, adding it did not expect a market recovery soon.

The company’s shares were down 5% in early trade.

As demand has slowed in countries such as the United States, Nokia and rival Ericsson (ERICb.ST) have tried to offset some of the weakness with higher sales to India, a low-margin market.

“The market situation is really challenging and it is witnessed by the fact that in our most important market, which is the North American market, our net sales are down 40% in Q3,” Chief Executive Pekka Lundmark told Reuters in an interview.

Nokia is targeting savings of between 800 million euros ($842 million) and 1.2 billion euros by 2026, its deadline to deliver a long-term comparable operating margin plan of at least 14%.

The company expects to reduce its employee base to between 72,000 and 77,000 employees, from 86,000, or about 16% job cuts at the high end.

Lundmark declined to give more details saying the company must consult first with employee representatives. However, he said he wanted to protect research and development.

Nokia expects at least 400 million euros of savings in 2024, and a further 300 million euros in 2025.

Ericsson, which has also laid off thousands of employees this year, said on Tuesday the uncertainty affecting its business would persist into 2024.

Nokia, which echoed Ericsson’s comments on uncertainty, however said there will be a more normal seasonal improvement in its network businesses in the fourth quarter.

The company did not cut its full-year outlook.

“We continue to believe in the mid-to-long-term market, but we are not going to sit and wait and pray that the market will recover anytime soon,” Lundmark said. “We simply don’t know when it will recover.”

For market recovery, Lundmark said the industry needs to invest in faster mid-band equipment to help cope with the growth in data traffic. “Only 25% of 5G base stations in the world outside of China currently has mid-band,” he said.

Mid-band equipment offers higher 5G speeds but many telecom operators started their 5G deployment with low-band gear that is cheaper but offers lower speeds.

Quarterly comparable net sales fell to 4.98 billion euros from 6.24 billion last year, missing an estimate of 5.67 billion euros according to a LSEG poll.

Nokia will move to a leaner corporate centre to boost strategic focus while protecting spending on research and development, and giving more operational autonomy to business units, it said.

“There are signs here and there that demand would start to pick up again but it’s too early to call it a broad-based trend,” Lundmark said.

($1=0.9493 euros)

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Officials in southern Ukraine said a Russian missile hit a residential area late Wednesday, killing at least two people.

Ukraine’s Interior Ministry said the missile hit a food shop in the Mykolaiv region.

Vitaliy Kim, the regional governor, said the attack happened in the village of Stepove and damaged both residential buildings and an agricultural business.

Another Russian missile strike earlier Wednesday hit a residential building in Zaporizhzhia.

Ukrainian President Volodymyr Zelenskyy said in his nightly address Wednesday that attack killed five people and injured five others.

Another Russian strike killed a woman and injured four other people in Dnipropetrovsk, Interior Minister Ihor Klymenko said. 

Some information for this report came from Agence France-Presse and Reuters.

Authorities in Russia have detained a journalist of U.S.-backed broadcaster Radio Free Europe/Radio Liberty (RFE/RL) on charges of failing to register as a “foreign agent”, RFE/RL said on Thursday.

Alsu Kurmasheva, who holds Russian and U.S. citizenships, is the second U.S. journalist to be detained in Russia this year. Evan Gershkovich, a correspondent for the Wall Street Journal, was arrested in March on espionage charges, which he denies.

Russia’s Tatar-Inform news agency said Kurmasheva had failed to register as a “foreign agent” while gathering information on Russia’s military activity. She could face up to five years in prison, according to RFE/RL, which called for her release.

Kurmasheva lived in Prague until May when she travelled to Russia due to a “family emergency,” RFE/RL said. Her two passports were seized on June 2 when she tried to fly back to Prague and she was fined for failing to notify Russian authorities of her U.S. citizenship.

Kurmasheva was waiting for her documents to be returned when she was detained on fresh charges on Oct 18, the broadcaster said.

Under Russian law, individuals and organisations receiving funding from abroad can be declared foreign agents, potentially undermining their credibility with the Russian public.

The European Union’s migration ministers meet on Thursday to discuss improving security in the bloc after deadly attacks in France and Belgium, as well as worries whether the war between Israel and Hamas would force mass displacement of people.

Some in the 27-nation bloc have already called for tighter borders, more repatriations of foreigners and new deals with African states to keep refugees and migrants from Europe since a Tunisian failed asylum-seeker killed two in Brussels on Monday.

A teacher was slain in northern France last week in an attack President Emmanuel Macron condemned as “Islamist terrorism“.

The killings occurred at a time of heightened security concerns across much of Europe linked to the Israel-Hamas war.

“The implications of the situation in the Middle East for our internal security… are very topical right now,” said an EU diplomat involved in preparing the ministerial talks.

“Both with regard to the situation as it develops in the Middle East and to what we’re seeing happening inside of the EU.”

It will be the ministers’ first chance to exchange views in person since the Oct.7 attack by Palestinian militant group Hamas that killed at least 1,400 Israelis, mostly civilians, and to which Israel has responded by bombarding Gaza.

The ministers are not expected to take any specific decisions but will discuss topics including what particular developments could cause Palestinians to flee in large numbers, or trigger violent acts inside the bloc.

Similar concerns in some EU quarters about a potential spike in immigration did not materialise after the Taliban returned to power in Afghanistan in 2021.

But the bloc has been wary since it was caught by surprise as more than a million people – mostly refugees from the war in Syria – reached its shores across the Mediterranean in 2015.

The attack in Brussels underlined persistent failings of the EU’s troubled migration and asylum systems, including security gaps and ineffective returns. Only about a fifth of people whose asylum cases fail in Europe are actually sent away.

Proponents of a looming overhaul of the EU’s migration policies – expected to be finalised this year – say it would improve the situation, including by facilitating quicker repatriations of foreigners with criminal records.

There is also a new push for deals with African countries – including Egypt and Morocco – akin to the one the EU has recently sealed with Tunisia, offering aid in exchange for Tunis bringing down departures for Europe.

Critics of the EU’s new migration and asylum policies doubt they would be effective and point to growing risks to human rights while focus is on deterring unauthorised immigration.

The EU, a bloc of 450 million people, has recorded some 250,000 irregular arrivals this year, in large part aided by smugglers.

Last year, the EU took in several million refugees for Russia’s war in the neighbouring Ukraine. But it wants to reduce irregular immigration from the Middle East and Africa.

($1 = 0.9488 euros)

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