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 yr with fewer than 89,000 workers. This system of layoffs isn’t over. “We count on to proceed decreasing headcount,” mentioned CEO Börje Ekholm on January 23.
Rival Nokia is now even smaller than that, regardless of competing not simply in cell but in addition within the fastened broadband, Web Protocol (IP) and optical tools 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 yr to finish it with round 74,100 workers, in response to its just-published annual report. Add US optical tools maker Infinera, acquired a few yr in the past and excluded from the year-end tally, and headcount would in all probability 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; Word: Ericsson experiences year-end figures whereas Nokia’s are for the yr common)
Cell harm
Automation and AI could also be having some impression, permitting the Nordic distributors to realize the identical outcomes with fewer individuals. But, throughout each firms, job losses partly mirror an enormous stoop in 5G spending by telcos. In 2022, operators worldwide collectively spent $45 billion on radio entry community (RAN) merchandise, in response to analysts at Omdia, a Gentle Studying sister firm. Expenditure fell to $40 billion in 2023 and $35 billion in 2024, remaining at that degree in 2025. For all of the current hubbub about AI-RAN, no person expects actual development.
Circumstances have been far worse for Nokia. Whereas each European corporations have been dropping market share in China – changed there by Huawei and ZTE, the native alternate options – Nokia has additionally suffered main setbacks in North America, broadly thought to be 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 harm left Nokia’s cell networks enterprise group (MN) with an working margin of simply 2.8% final yr, down from 8.8% in 2022. Underneath strain to indicate an enchancment, CEO Justin Hotard, who took over in April final yr, confirmed at Nokia’s capital markets day (CMD) in November that total cuts might be on the high finish of the vary introduced by his predecessor Pekka Lundmark in late 2023. Meaning slicing 14,000 jobs by the top of this yr from a workforce of 84,000 workers when Lundmark’s program was unveiled. The intention 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 simply 70,000, plus Infinera, reasonably than the 72,000 initially proven. To realize his purpose, Hotard should due to this fact lower about 4,100 jobs this yr, 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 centered on MN, Nokia’s former boss instructed Gentle Studying in July 2024. “We have now gone from on the finish of the third quarter final yr round 86,000 to beneath 80,000 and most of that decline has been in cell networks,” mentioned Lundmark on the time.
Regardless of this, MN appeared barely worthwhile final yr and was already spending far much less on analysis and growth (R&D) than Ericsson. Certainly, spending by MN fell by 4% final yr, 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 degree. 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 cell infrastructure (MI) enterprise group this yr. The controversial plan, identified to have been unpopular with some senior executives, ought to permit Nokia to get rid of varied overlapping roles and scale back prices. Just a few underperforming models, together with some personal 5G and microwave belongings, could also be bought. However the restructuring may also obscure the efficiency of the primary constituent elements, hiding the small print of MN’s earnings (or losses) from traders.
Individually from this, Hotard has additionally been reversing out of the Lundmark scheme that had given every enterprise group better autonomy, with its personal essential assist features. That has meant extracting finance, HR, communications and advertising and marketing, and authorized features 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 employees beforehand centered on a selected sector now cowl the whole lot 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 current optical unit. The rationale for paying $2.3 billion to accumulate Infinera was largely about scale. Earlier than the deal went by way of, Infinera generated the majority of its revenues in North America, whereas Nokia bought primarily to different areas. Infinera developed merchandise primarily based on indium phosphide. Nokia specialised in silicon photonics. The shortage of overlap might need defined why Nokia was anticipating simply €200 million ($231 million) in “synergies” throughout companies with a mixed price base of greater than €3 billion ($3.5 billion), in response to Lundmark’s estimate on the time.
Infinera had about 3,400 workers earlier than the acquisition, in response to its filings with the US Securities and Change Fee. Regardless of the present quantity, it’s at all times excluded from complete headcount in Nokia’s statements concerning the ongoing cost-saving program that Lundmark initiated. That implies Infinera, if not the entire of Nokia’s optical enterprise, is exempt from these cuts.
As at MN, Hotard may even be involved about making cuts when Nokia remains to be perceived to be second finest, after Ciena. Undoubtedly, optical represents Nokia’s most engaging speedy alternative for gross sales development as AI information facilities pour cash into connectivity. However its optical unit managed an natural gross sales improve of simply 14% final yr, reporting about €3 billion ($3.5 billion) in revenues, whereas Ciena grew gross sales by 19%, to just about $4.8 billion. Ciena’s R&D finances of about $848 million additionally went nearly totally into optical applied sciences. Whereas NI’s expenditure of roughly €1.5 billion ($1.7 billion) was double that quantity, it will have been cut up between optical, IP and glued broadband.
A turnaround at MN – now the primary element of MI – would ease the strain on Hotard. However regardless of forecasting a rise in cell site visitors between now and 2028, he doesn’t count on the addressable market to develop from its present dimension 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 development in market share won’t ship the development Nokia so desperately wants in profitability. The true prize could be new offers with AT&T and Verizon, the US telcos that Nokia has misplaced as cell clients because the launch of 5G. Neither appears more likely to return earlier than the arrival of 6G in 2030. Now all-in with Ericsson, AT&T remains to be changing Nokia’s radios. Yago Tenorio, Verizon’s chief expertise officer (CTO), has objected to using graphics processing models (GPUs) within the RAN, as Nokia proposes. “I feel that is a complication that I am unsure we’d like, as a result of GPUs are very costly,” he instructed 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 current 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 growth 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 supplies us with the power to have our customized silicon together with Nvidia’s GPUs.” However even when some sources might be shared, sustaining two tracks might be dearer than having one. As financial realities chew, it won’t be the Nvidia program that’s in danger.