Finnish telecoms giant Nokia says a big cost-cutting program unveiled today will save it €700m ($799m) by the end of 2020 and result in substantial job cuts.
Alongside the cost reductions, Nokia is stepping up efforts in 5G mobile radio products and creating a new Enterprise business unit to bring together fast-growing activities under current chief strategy officer Kathrin Buvac.
"Our early progress in 5G is extremely strong, we continue to increase our investment in this critical technology, and our win rate for new deals suggests that we are in a very good competitive position," Rajeev Suri, president and CEO, said in a statement.
Reporting a 27 percent drop in profits in its latest quarterly period ending September 30, from €668m a year ago to €487m in line with expectations, Nokia said cost savings will come from areas including significantly reduced central support functions, cross-company activities, R&D in legacy products, and real estate.
According to Nokia, these planned changes are expected to result in a net reduction of employees globally.
"Even if these actions are right for our business, we do not take them lightly given the expected impact on our employees," Suri said.
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The company has already been cutting costs resulting from its 2016 €15.6bn merger with French networking giant Alcatel-Lucent. Cost reductions from that deal are due to amount to €1.2bn and be completed this year.
"With the successful Alcatel-Lucent integration and cost-saving program soon to be behind us, we are taking steps to accelerate the execution of our strategy and sharpen our customer focus," Suri said.
Nokia's third-quarter net sales came in at €5.5bn ($6.27bn), slightly above expectations.
More than half of Nokia's profits still come from its patent holdings, a legacy of the company's mobile-phone past. In that context, Nokia also today announced that its patent license deal with Samsung is being extended.
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