Aiming to take advantage of a market in which it is one of only a few communications technology providers able to address the next-generation needs of Tier 1 suppliers among others, Nokia has set out a three-phased journey to deliver sustainable, profitable growth and technology leadership, and made bold predictions for revenue and profit over the next two years.
After some recent challenging financial periods, the company said it had formulated a clear and detailed plan to reset its business, with a new company purpose and new ways of working.
Overall, Nokia sees a number of major trends affecting the communications technology industry over the next few years, with 5G and resulting technologies at their core, and creating opportunities for communications service providers, enterprises and webscales.
These trends include next-generation access, with fibre-to-the-home and optimised transport technologies delivering a “seamless” experience for consumers in homes and workplaces, enabling a gigabit society when combined with mobile 5G. In addition, Nokia predicted the connected digital enterprise would drive massive productivity, efficiency and safety gains across industries. The net result of this will be significant growth in the enterprise market, said Nokia.
“We have moved away from end-to-end as a cornerstone of our equity story and have instead put in place four fully accountable, empowered business groups, arranged according to how customers buy,” said Nokia president and CEO Pekka Lundmark.
“Each of these business groups has solid strategies and targets to grow market share and margins through enhanced technology leadership. 5G is still in its early phase,” he added. “We estimate that the peak of the 5G market will last roughly twice as long as it did with 4G, so these trends of next-generation access and digital connected enterprise still have a long way to run. I want Nokia to be able to shape them, delivering best-of-breed products, services and connectivity that allow our customers to deliver constantly improving performance.”
The first stage of what will be an ongoing reset will focus on securing technology leadership and see Nokia implementing the new operating model to reduce complexity and increase accountability. It will also aim to secure full portfolio competitiveness in mobile networks, resetting its cost base and renewing its ways of working.
From 2022 onwards, the company aims to accelerate competitiveness and grow margins through enhanced technology leadership, digitisation of its own operations, automation and capturing emerging opportunities. It then plans to scale up to drive growth in new use cases and business models, including in enterprise and private wireless, to grow faster than the market.
With its total estimated network addressable market expected have a compound annual growth rate of approximately 1% from 2020 to 2023, and network infrastructure at twice this rate, Nokia anticipates comparable operating margin to increase by 10% to 13% in 2023, with net sales to be in the region of €20.6bn to €21.8bn by the end of the year. The forecast for 2023 is that sales will grow faster than the market average.
Hitting these targets will mean closing significant deals, and in a first step towards the goal, Nokia revealed today that it has signed a five-year deal with AT&T to deploy the mobile operator’s C-band network, for which it recently acquired spectrum in parts of the US. By deploying 5G in C-band spectrum, Nokia said AT&T would be able to better provide cutting-edge 5G services with the right mix of coverage and capacity.
The first phase of the C-band auction opened up 280MHz of spectrum, with 100MHz of spectrum available for 5G deployments by the end of this year. Nokia’s C-band portfolio includes support for both 5G standalone (SA) networks and non-standalone (NSA) networks, cloud-based implementations and Open RAN products, providing AT&T with diverse capability for its 5G deployment. Nokia’s C-band RAN technology will interwork with existing Nokia LTE RAN equipment.
“AT&T is committed to bringing the power of 5G to businesses and communities across the nation, and our C-band deployments with Nokia will help add 5G capacity where it’s needed,” commented Igal Elbaz, senior vice-president of wireless and access technology at AT&T.
“Nokia has been our trusted collaborator for more than 20 years as we’ve rolled out each generation of wireless technology, and its C-band portfolio brings the right capabilities to help enable AT&T to deliver an exciting and powerful 5G experience that our subscribers have come to expect from us,” added Elbaz.