Nokia to cut 10,000 jobs worldwide to bankroll new 5G drive

Former high-flying Finnish phone firm to use estimated €600m in savings to fund R&D to catch up with rivals

The Finnish telecommunications company Nokia has unveiled plans to cut up to 10,000 jobs worldwide in the next two years, and wants to use the savings to catch up with rivals on 5G technologies.

The company said it would reduce its global workforce to between 80,000 and 85,000 over the next 18 to 24 months, from 90,000 now. The exact number will depend on market developments. Nokia will invest the estimated €600m (£515m) annual cost savings in research & development, particularly in 5G, cloud and digital infrastructure.

Pekka Lundmark, Nokia’s new chief executive who took over in August, has vowed to catch up in 5G, the new generation of mobile networks, after Nokia fell behind its main competitors, China’s Huawei and Sweden’s Ericsson. It missed out on the early rounds of 5G networks after focusing on the integration of Alcatel-Lucent, the French smartphone and wireless equipment firm bought in 2015.

Lundmark said: “In those areas where we choose to compete, we will play to win. We are therefore enhancing product quality and cost competitiveness, and investing in the right skills and capabilities.”

Nokia’s planned job losses include 96 in the UK. France will be spared this time, after 1,233 jobs were cut there last year, which slashed the workforce of its French subsidiary Alcatel-Lucent by a third.

A Nokia spokesperson said: “These plans are global and likely to affect most countries. It is too early to comment in detail, as we have only just informed local works councils and expect the consultation processes to start shortly, where applicable.”

About 300 jobs are expected to go in Finland, mainly at the Nokia headquarters. The spokesperson said the company would continue to recruit in the 5G area in the country, and that the changes would be net positive.

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Last year, Nokia employed almost 40,000 people in Europe, 20,500 in the Asia-Pacific region, 13,700 in Greater China, 12,000 in North America and 3,700 in Latin America.

The global measures will result in one-off charges of €600m to €700m, half of which will be booked this year. Even so, Nokia stuck to its financial guidance for 2021.

Nokia now focuses on telecoms network equipment. Once the world’s biggest maker of mobile phone handsets, the company was left behind as it underestimated the popularity of touchscreen smartphones and sold its handset business to Microsoft in 2013, which later wrote it off.

Nokia phones made a comeback after a firm set up by former Nokia employees called HMD Global licensed the Nokia brand name from Microsoft.

Contributor

Julia Kollewe

The GuardianTramp

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