Nokia Corp plans to cut between 5,000 and 10,000 jobs over the next two years, which it says will compete in the 5G equipment market with competitors Huawei Technologies Co. and Ericsson AB.
The job cuts will reduce the Finnish company’s current staff of about 90,000 employees by as much as 11% and reduce its cost base by about $ 700 million, the company said on Tuesday. It is said that the savings will, among other things, compensate for the increased investment in research and development.
Nokia is in the early stages of its second major restructuring program in less than a decade. Following the sale of its once dominant mobile phone business, Nokia acquired French competitor Alcatel-Lucent to focus on manufacturing mobile antennas, internet routes and other telecommunications equipment. But it lost ground to Huawei and Ericsson due to the struggle to integrate Alcatel-Lucent, as well as a flaw in the acquisition of computer chips that made its products more expensive and less desirable.
According to research firm Dell’Oro Group, Nokia’s share of the total telecommunications equipment market fell to 15% last year from 16% in 2019, while Huawei increased its lead to 31% from 28% in the same period.
Last year, Nokia replaced Rajeev Suri with Pekka Lundmark, who said the company would withdraw from its previous plan to offer a range of products to focus on becoming a leader in 5G cellular technology. The company said Tuesday it will streamline its product portfolio and reduce costs. He plans to release more details on his strategy on Thursday.