Finnish telecom giant Nokia has revised its comparable operating margin target for 2026, decreasing it from at least 14% to at least 13%, following the company’s failure to snag a crucial deal with a major US telecom carrier.
Nokia clarified that it still intends to achieve the initial 14% target, however, considering current market conditions within its mobile networks business, the company deemed it prudent to make this revision. The setback occurred after AT&T opted for Ericsson to construct a telecom network utilising a cost-cutting technology known as open radio access network (ORAN). This initiative by AT&T is anticipated to cover 70% of its wireless traffic in the United States by late 2026.
Nokia’s Chief Executive, Pekka Lundmark, acknowledged the impact of the AT&T decision, describing it as “bad news” while noting that it was a customer-specific situation driven by financial considerations rather than technological or performance issues. However, Lundmark was confident that the setback was not indicative of a broader trend, stating, “we are not seeing this spreading to other customers.”
In a separate development, Nokia disclosed a new collaboration with Deutsche Telekom (DT) to implement ORAN in Germany, marking Nokia’s return into DT’s commercial networks after being absent since 2017. Lundmark noted the move as a win, stating, “we have been out of that network since 2017, and now we are making a comeback there through ORAN technology, so that is a significant win for us.”
Nokia is actively working to revamp its mobile networks business by reducing its cost base, aiming for a double-digit operating margin on sales of €10 billion ($10.78 billion) by 2026. The company anticipates needing approximately €11.5 billion in sales to achieve this target. As part of this restructuring effort, Nokia previously announced plans to cut up to 14,000 jobs in October, citing weaker demand for 5G equipment and cautioning against an immediate market recovery.
Despite the setback with AT&T, Nokia’s strategic collaboration with Deutsche Telekom and its commitment to cost optimization reflect the company’s resilience and determination to navigate challenges in the competitive telecom market.