Nokia Australia revenue drops to AU$540m

Nokia Services has reported net profit of AU$21.2 million in Australia on revenue of AU$536.9 million for FY17.
Written by Corinne Reichert, Contributor

Nokia has lodged its full-year financial results with the Australian Securities and Investments Commission (ASIC), with the Finnish networking giant's local sales revenue dropping from AU$856.4 million in FY16 down to AU$536.9 million in FY17.

Despite this, net profit fell only slightly, from AU$22.9 million in 2016 to AU$21.2 million in 2017, while gross profit rose from AU$79.4 million to AU$86.4 million.

Net cash inflow from operating activities for the financial year ended December 31 fell significantly, from AU$58 million to AU$10.6 million, as receipts from customers almost halved from AU$1.1 billion down to AU$594.6 million.

Nokia's local tax bill also shrank, from paying AU$12.2 million in income tax in 2016 to paying AU$3.7 million in 2017. Payments to suppliers and employees fell from AU$1.03 billion to AU$585.5 million.

Cash and cash equivalents by the end of the period amounted to AU$52.7 million, up from AU$44.2 million in the year previous.

Globally, Nokia had in October updated its financial guidance for 2017 and 2018 due a "slightly more challenging than earlier anticipated" market across its Networks division.

"That decline, which we estimate to be in the range of 2 percent to 5 percent, is the result of the multiple technology transitions underway; robust competition in China; and near-term headwinds from potential operator consolidation in a handful of countries," Nokia CEO Rajeev Suri said at the time.

Also listed as a reason for the revision was "the level of R&D investment needed to maintain product competitiveness and accelerate 5G".

Suri said Nokia is counting on 5G to assist in its strategy of moving beyond communications service providers, as 5G will require end-to-end systems for all service providers.

"As the market transitions to 5G, I believe that the benefits of our portfolio will become even more apparent given that 5G is about much more than radio," the chief executive said.

"It requires cloud core, IP routing, transport of many kinds, fixed-wireless access, software-defined networking, and more, and Nokia is one of the very few companies that is able to meet all those needs."

In the Australian 5G market, both Telstra CEO Andy Penn and Optus CEO Allen Lew have previously told ZDNet that they are in discussions with Nokia along with the four other global companies with 5G networking offerings -- Ericsson, Huawei, Samsung, and ZTE.

Optus had signed an MOU with Nokia back in 2016 to collaborate on developing a 5G network, under which it undertook closed lab tests using Nokia's 5G radio test bed on its Airscale product.

However, both Optus and Telstra have yet to announce their final decision on which networking giant they choose to deploy their 5G networks with, while Vodafone Australia -- which trialled 5G with Nokia back in 2016 -- has yet to announce any 5G plans at all.

Read also: Nokia targets 5G future with new chipsets that boast 3x capacity (TechRepublic)

In the Australian fixed-line space, Nokia is working with the National Broadband Network (NBN) company on trialling NGPON2 technology across the fibre-to-the-premises (FttP) network, which would bring speeds up to 10Gbps, and on launching 1Gbps-capable G.fast this year across fibre to the node (FttN), fibre to the basement (FttB), and fibre to the curb (FttC).

Nokia currently provides NBN's FttN, FttP, and hybrid fibre-coaxial (HFC) services -- and while rival networking giant Ericsson in December extended its partnership to provide NBN's fixed-wireless network operations, Nokia head of Fixed Networks Federico Guillen told ZDNet in February that Nokia has "told [NBN] what we do in fixed-wireless access, which is now part of our portfolio as well".

In February, Nokia also revealed to ZDNet that it is has been hosting discussions with a Sydney-based university in order to push a framework for drones in Australia with particular focus on agriculture and public safety.

Nokia head of IoT Market Solutions Mohamed Abdelrehim told ZDNet that disaster use cases for drones include missing persons search using thermal cameras across a swarm of drones, along with the delivery of first aid kits and mapping and route guidance for search and rescue teams. Fires could additionally be prevented by drones monitoring dry areas, which could also detect and extinguish them.

For the agriculture sector, drones could be used across crop farming and harvesting, transport to processing, processing machinery, and transport to customer, according to Nokia.

"[We are] working with the universities and the community here, then we are able to build a go-to-market model for here," Abdelrehim said.

"I believe Australia has the biggest focus; if you are able to adopt that quickly, you will be one of the biggest countries who's really driving drones with Internet of Things. You have huge potential compared to other countries."

Globally, Nokia has also been focused on strengthening its play in the intelligent Wi-Fi space after acquiring Unium; and launching smartphones with Android.

Nokia earlier this month announced that it would be selling its smartwatch and digital health business, however.

Its global net sales for the first quarter of 2018 dropped by 8 percent year on year from €5.4 billion to €4.9 billion, with a loss for the period of €354 million.

Correction 5:03pm AEST May 23, 2018: Nokia's income tax figures.

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