Nokia Says Network Infrastructure Demand May Pick Up in 2024

(Bloomberg) — Nokia Oyj said it might see a pickup in the second half of the year as its internet network infrastructure business brings in sales and cost-cutting measures pay off.

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The Finnish telecom said it expects adjusted operating profit for 2024 to be €2.3 billion to €2.9 billion ($2.5 billion to $3.2 billion), according to a statement on Thursday. Analysts had expected the profitability metric to remain stable from a year earlier at about €2.4 billion.

Shares rose as much as 7.6% to €3.39 in early trading in Helsinki, the most in 18 months.

Nokia had a difficult 2023, with mobile operators being slow to adopt its 5G gear and legal disputes with several smartphone makers, including Oppo and Vivo, over patent payments. Net income for the year dropped to €679 million from €4.3 billion in 2022, and revenue fell to €22.3 billion from €24.9 billion.

“Looking ahead, we expect the challenging environment of 2023 to continue during the first half of 2024, particularly in the first quarter,” Nokia’s Chief Executive Officer Pekka Lundmark said in a statement. He also announced a €600 million share buyback program over the next two years.

The company said there were positive signs that sales could increase in the second half of the year, described in the statement as “green shoots.”

Nokia has also been steadily increasing its market share in 5G, Lundmark said in an interview. While investment has been slow, mobile operators will have to upgrade their networks to 5G in the coming years. “I’m absolutely convinced that it is only a question of timing before we get there,” Lundmark told Bloomberg.

Read More: Ericsson Sees Weak 2024 Demand as Investment ‘Unsustainably Low’

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What Bloomberg Intelligence Says:

Nokia’s 4Q results and 2024 outlook reflect the already well understood demand headwinds it faces, notably with mobile-carrier customers. Management commentary on “green shoots” and a 2H recovery…