A collapse in gross sales of 5G community merchandise has been a painful expertise for workers at Ericsson and Nokia. Since 2022, when its headcount topped 105,000 after takeovers, Ericsson has slashed nearly 17,000 jobs, ending final 12 months with fewer than 89,000 workers. This system of layoffs isn’t over. “We anticipate to proceed lowering headcount,” mentioned CEO Börje Ekholm on January 23.
Rival Nokia is now even smaller than that, regardless of competing not simply in cellular but in addition within the fastened broadband, Web Protocol (IP) and optical gear sectors. In 2018, two years after buying Alcatel-Lucent, it employed about 103,000 individuals. By the top of 2024, practically 27,500 jobs had disappeared, leaving it with a complete headcount of 75,600.
Nokia appeared to hit an emergency brake in 2025, trimming its workforce by simply 1,500 roles final 12 months to finish it with round 74,100 workers, based on its just-published annual report. Add US optical gear maker Infinera, acquired a few 12 months in the past and excluded from the year-end tally, and headcount would most likely have risen. Nokia reported a year-average determine of 78,005 workers, a distinction of three,905 with the decrease year-end quantity. However the axing seems set to persist.
(Supply: Ericsson, Nokia, Gentle Studying; Observe: Ericsson studies year-end figures whereas Nokia’s are for the 12 months common)
Cellular injury
Automation and AI could also be having some influence, permitting the Nordic distributors to realize the identical outcomes with fewer individuals. But, throughout each corporations, job losses partly mirror an enormous droop in 5G spending by telcos. In 2022, operators worldwide collectively spent $45 billion on radio entry community (RAN) merchandise, based on analysts at Omdia, a Gentle Studying sister firm. Expenditure fell to $40 billion in 2023 and $35 billion in 2024, remaining at that stage in 2025. For all of the current hubbub about AI-RAN, no person expects actual progress.
Circumstances have been far worse for Nokia. Whereas each European corporations have been shedding market share in China – changed there by Huawei and ZTE, the native alternate options – Nokia has additionally suffered main setbacks in North America, broadly considered the world’s most worthwhile 5G market. In 2020, Verizon, a Nokia buyer in 4G, switched to Samsung for its 5G rollout and has caught with it ever since. Three years later, AT&T opted to rely solely on Ericsson and change Nokia throughout a 3rd of its footprint.
Regardless of job cuts up to now, all this injury left Nokia’s cellular networks enterprise group (MN) with an working margin of simply 2.8% final 12 months, down from 8.8% in 2022. Below stress to point out an enchancment, CEO Justin Hotard, who took over in April final 12 months, confirmed at Nokia’s capital markets day (CMD) in November that total cuts can be on the high finish of the vary introduced by his predecessor Pekka Lundmark in late 2023. Which means slicing 14,000 jobs by the top of this 12 months from a workforce of 84,000 workers when Lundmark’s program was unveiled. The goal is to scale back annual prices by €1.2 billion (US$1.4 billion), roughly 15% of personnel bills.
The workforce quantity initially cited, and reproduced in Nokia’s newest annual report, was 86,000. The discrepancy of two,000 seems to be defined by the divestment of Nokia’s submarine networks enterprise in 2024. However that may imply it doesn’t rely towards the goal. As implied by a presentation on the CMD (slide 77 of this deck), Nokia could be shrinking its headcount to only 70,000, plus Infinera, slightly than the 72,000 initially proven. To attain his objective, Hotard should due to this fact reduce about 4,100 jobs this 12 months, one other 6% of the December complete.
Carrying out that with out weakening Nokia is the problem. The primary 6,000 job cuts executed by Lundmark have been targeted on MN, Nokia’s former boss informed Gentle Studying in July 2024. “We’ve got gone from on the finish of the third quarter final 12 months round 86,000 to under 80,000 and most of that decline has been in cellular networks,” mentioned Lundmark on the time.
Regardless of this, MN regarded barely worthwhile final 12 months and was already spending far much less on analysis and growth (R&D) than Ericsson. Certainly, spending by MN fell by 4% final 12 months, to lower than €2.08 billion ($2.4 billion), whereas spending throughout MN, Nokia Applied sciences and cloud and community providers got here to roughly €2.95 billion ($3.41 billion). Ericsson, with its deal with 5G, spent about 48.9 billion Swedish kronor ($5.2 billion) at group stage. Nokia ought to have benefited from Nvidia’s $1 billion funding, secured final October. However whereas this added €859 million to its internet money, the year-over-year improve in MN’s R&D outlay for the ultimate quarter was measly.
Hotard will clearly look to make cuts by collapsing MN, Nokia Applied sciences and cloud and community providers right into a single cellular infrastructure (MI) enterprise group this 12 months. The controversial plan, recognized to have been unpopular with some senior executives, ought to permit Nokia to get rid of varied overlapping roles and scale back prices. A couple of underperforming items, together with some non-public 5G and microwave belongings, could also be bought. However the restructuring may also obscure the efficiency of the principle constituent elements, hiding the main points of MN’s income (or losses) from traders.
Individually from this, Hotard has additionally been reversing out of the Lundmark scheme that had given every enterprise group larger autonomy, with its personal vital help capabilities. That has meant extracting finance, HR, communications and advertising and marketing, and authorized capabilities from these teams and merging them right into a single unit serving each MI and community infrastructure (NI, comprising the fastened, IP and optical elements of Nokia) in future. Comms workers beforehand targeted on a particular sector now cowl every little thing that Nokia does. The ensuing overlap brings a transparent alternative to chop jobs.
Optical limits
Elsewhere in NI, workforce shrinkage could be tough regardless of the merger of Infinera with Nokia’s present optical unit. The rationale for paying $2.3 billion to amass Infinera was largely about scale. Earlier than the deal went by means of, Infinera generated the majority of its revenues in North America, whereas Nokia bought primarily to different areas. Infinera developed merchandise based mostly on indium phosphide. Nokia specialised in silicon photonics. The dearth of overlap might need defined why Nokia was anticipating simply €200 million ($231 million) in “synergies” throughout companies with a mixed value base of greater than €3 billion ($3.5 billion), based on Lundmark’s estimate on the time.
Infinera had about 3,400 workers earlier than the acquisition, based on its filings with the US Securities and Change Fee. Regardless of the present quantity, it’s all the time excluded from complete headcount in Nokia’s statements concerning the ongoing cost-saving program that Lundmark initiated. That means Infinera, if not the entire of Nokia’s optical enterprise, is exempt from these cuts.
As at MN, Hotard may also be involved about making cuts when Nokia continues to be perceived to be second greatest, after Ciena. Undoubtedly, optical represents Nokia’s most tasty instant alternative for gross sales progress as AI knowledge facilities pour cash into connectivity. However its optical unit managed an natural gross sales improve of simply 14% final 12 months, reporting about €3 billion ($3.5 billion) in revenues, whereas Ciena grew gross sales by 19%, to almost $4.8 billion. Ciena’s R&D finances of about $848 million additionally went nearly fully into optical applied sciences. Whereas NI’s expenditure of roughly €1.5 billion ($1.7 billion) was double that quantity, it will have been break up between optical, IP and glued broadband.
A turnaround at MN – now the principle part of MI – would ease the stress on Hotard. However regardless of forecasting a rise in cellular visitors between now and 2028, he doesn’t anticipate the addressable market to develop from its present measurement of about €39 billion ($45.1 billion) in annual product and repair revenues over this era (slide 64 of the CMD deck). Any gross sales improve on this setting must come from market share features.
Even progress in market share may not ship the advance Nokia so desperately wants in profitability. The actual prize could be new offers with AT&T and Verizon, the US telcos that Nokia has misplaced as cellular prospects for the reason that launch of 5G. Neither appears more likely to return earlier than the arrival of 6G in 2030. Now all-in with Ericsson, AT&T continues to be changing Nokia’s radios. Yago Tenorio, Verizon’s chief know-how officer (CTO), has objected to the usage of graphics processing items (GPUs) within the RAN, as Nokia proposes. “I believe that is a complication that I am undecided we want, as a result of GPUs are very costly,” he informed Gentle Studying in October.
Different CTOs are equally skeptical about inserting GPUs into the RAN, and merchandise are nonetheless not prepared. The hazard stems from buyer uncertainty about Nokia’s dedication to its present vary of purpose-built 5G merchandise. Nokia has tried to deal with this by insisting the Nvidia partnership is additive, not a alternative.
“It is an enlargement of our portfolio,” insisted Pallavi Mahajan, Nokia’s CTO, when not too long ago requested if it will shut the purpose-built growth observe. “It gives us with the power to have our customized silicon together with Nvidia’s GPUs.” However even when some assets will be shared, sustaining two tracks can be dearer than having one. As financial realities chew, it won’t be the Nvidia program that’s in danger.
