Nokia said on Thursday it would cut up to 14,000 jobs as part of a cost-cutting plan after a sharp decline in third-quarter profits. The Finnish telecoms giant said it would reduce its cost base and improve operational efficiency to "respond to the challenging market environment."
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The company aims to reduce its total cost base by 800 million euros ($842.5 billion) starting in 2023 and by 1.2 billion euros by the end of 2026.
This will reduce the number of employees from the current 86,000 to 72,000 to 77,000.
The massive layoffs came after Nokia reported a 20% year-on-year drop in third-quarter net sales to 4.98 billion euros. Profit during the period plummeted 69% year-on-year to 133 million euros.
Earlier this year, Nokia's rival Ericsson announced plans to cut 8,500 jobs as part of a cost-cutting plan.
Nokia, one of the world's largest telecoms equipment makers, has been facing the headwinds of a slowing global economy and cuts in infrastructure spending by mobile operators.
Sales of Nokia's mobile network business, its largest revenue division, fell 24% year-on-year to 2.16 billion euros, and the unit's operating profit fell 64% year-on-year.
Nokia said this was mainly due to the decline in the North American market. The company also said that sales in its main market India have "slowed down" as 5G deployment "normalizes". 5G is the next generation of mobile internet that promises faster speeds, and Nokia is part of India's push to promote the technology.
This year, the United States has also taken cost-cutting measures, especially with operators such as Verizon and AT&T.
Nokia Chief Executive Pekka Lundmark said in a statement on Thursday that the decline in mobile network revenue was due to "a slowdown in the pace of 5G deployment in India, which means that growth in India is no longer enough to offset the slowdown in North America."
The company is sticking to its forecast, expecting full-year net sales to be between 23.2 billion euros and 24.6 billion euros.
"I remain confident in the fundamental drivers of our business," Lundmark said. "Data traffic continues to grow, the 5G rollout is still only about 25% complete outside of China, and networks will continue to invest. The cloud computing and artificial intelligence revolution will not happen without significant investment in networks, and the capabilities of these networks will be greatly improved."
Nokia's figures come after Sweden's Ericsson released its third-quarter earnings on Wednesday, which showed a drop in revenue and similar problems in North America.
Ericsson Chief Executive Borje Ekholm warned in a statement on Wednesday that "potential uncertainty" affecting its mobile networks business will continue into 2024, casting doubt on the telecoms equipment maker's recovery.