Finnish telecom multinational Nokia (Helsinki: NOKIA) on Thursday announced that it would cut up to 14,000 jobs as part of a cost reduction plan following a 69% plunge in its profit in the third-quarter.
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The company stated that the objective is to reduce its cost base and increase operation efficiency to “address the challenging market environment.”
The company reported a 20% year-on-year drop in sales between July and September to €4.98 billion ($5.26 billion). Nokia’s profit over the period plunged by 69% year-on-year to €133 million.
Nokia is targeting to lower its cost base on a gross basis from 2023 by between 800 million euros ($842.5 billion) and 1.2 billion euros by the end of 2026.
This will reduce the number of employees currently from 86,000 to between 72,000 and 77,000.
“The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia and we will support everyone that is affected by this process,” the Nokia chief executive Pekka Lundmark said, commenting on the decision.
The corporation did not detail where the job cuts would occur, but said that they are likely to affect its operations in Europe, the UK, and US.
The exact scale of the cost-cutting program will depend on demand for the company’s products, Nokia said, adding that it “expects to act quickly” in order to save as much as €400 million next year and another €300 million in 2025.
“We continue to believe in the mid-to-long-term market, but we are not going to sit and wait and pray that the market will recover anytime soon,” Lundmark said. “We simply don’t know when it will recover.”
Nokia, one of the world’s largest telecommunications equipment makers, Nokia has been facing tough times from a slowing global economy and from infrastructure spending reductions made by mobile operators.
Nokia CEO Pekka Lundmark said in a Thursday statement that the decline in mobile networks revenue was owed to “some moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America.”
Other telecom companies has also been implementing cost cutting measures.
Earlier this year, Nokia’s rival Ericsson announced plans to lay of 8,500 employees, also as part of a cost cutting plan. The Swedish company also reported a decline in revenue.
Ericsson CEO Borje Ekholm warned in a Wednesday statement that the “underlying uncertainty impacting” its mobile networks business will persist into 2024, casting doubt over a recovery for telecommunications equipment makers.
U.S telecom companies such as Verizon and AT&T has also implemented cost cutting measures this year.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
