Nokia’s CEO Rajeev Suri said the vendor expects sales to be boosted by deals for large-scale 5G deployments in the U.S
Finnish vendor Nokia experienced a challenging first quarter due to lower sales in the North American region, which negatively impacted the vendor’s quarterly earnings. However, the company’s CEO Rajeev Suri said Nokia is well-positioned to take advantage of an expected surge in sales during the second quarter of the year, mainly due to increasing opportunities in the 5G field.
“We see strong momentum building for the full year despite a slow start in networks. I have considerable confidence that Nokia is well-positioned to out-perform a strengthening networks market and meet our full-year 2018 guidance,” Suri said in a statement.
“We have clear visibility to 5G deals for large-scale commercial rollouts in United States in the second half of the year,” the executive added.
Suri also highlighted that Nokia’s end-to-end portfolio positions the company very well for 5G. “We will fuel that adoption in 2018 with investments in trial costs, as needed. These investments will position us to capture opportunities in a 5G market that we believe will substantially accelerate later this year in the United States, followed by other large-scale 5G commercial rollouts starting in 2019 in multiple geographies. Given these developments, we expect to see continued softness in the first half of 2018, followed by a much stronger second half.”
North America is expected to be among the first regions to deploy 5G, with commercial rollouts set to begin at the end of 2018.
Q1 financial results
The vendor recorded revenues of 4.92 billion euros ($6 billion) in the first quarter of the year, down 8% compared to 5.37 billion euros in the year-ago period.
Nokia also reported a net loss of 351 million euros in Q1 2018, compared to a net loss of 473 million in the same quarter in 2017.
The company’s networks business recorded a 12% drop in net sales to €4.3 billion. Net sales at its Ultra Broadband Networks unit – which covers fixed and mobile products – amounted to 1.9 billion euros in the quarter, down 17% year-on-year. Revenues for its Mobile Networks unit dropped 19% to 1.4 billion euros, mainly due to lower sales in North America and reduced demand for radio networks.
Meanwhile, Nokia’s revenues in its fixed networks unit declined 11% year-on-year to 445 million euros due to lower sales in broadband access, services and digital home.
In an earnings call, Suri said that the U.S ban on ZTE could have a positive impact in Nokia’s business in the long term, particularly in the areas of mobile and optics. The executive also said it was too early to determine the impact this ban will have for ZTE’s overall business.
The U.S. Department of Commerce has banned American companies from selling telecommunications equipment to Chinese vendor ZTE after the firm allegedly did not live up to the terms of an agreement that had been worked out after it illegally shipped telecom equipment to Iran and North Korea. The government’s order will ban American firms from exporting components directly to ZTE or through a third country until March 13, 2025.
