by Supantha Mukherjee

STOCKHOLM (Reuters) – Finnish telecommunications equipment group Nokia said on Thursday it would cut up to 14,000 jobs as part of a new cost-cutting plan as falling demand for 5G equipment cut its third quarter sales by a fifth.

The group’s stock lost 5% in early trading.

Nokia and rival Ericsson have tried to partly offset weak demand in countries such as the United States by increasing sales in India, a low-margin market.

“The market situation is really difficult, as evidenced by the fact that in our most important market, which is the North American market, our net sales fell by 40% in the third quarter,” said Managing Director Pekka Lundmark during an interview with Reuters.

The company is targeting between €800 million and €1.2 billion in cost savings by 2026, in order to achieve its long-term operating margin target of at least 14% by this horizon.

The savings program is expected to lead to an organization employing 72,000 to 77,000 employees compared to Nokia’s 86,000 employees today, the company said in a statement.

Pekka Lundmark did not want to give further details, indicating that the company must first consult employee representatives. However, he made it clear that he wanted to protect research and development.

Nokia plans at least 400 million euros in savings in 2024, and an additional 300 million euros in 2025.

Ericsson, which has also cut thousands of jobs this year, said on Tuesday that uncertainty over its business would persist until 2024.

Echoing these comments, Nokia, however, said its network business would see a more consistent seasonal improvement in the fourth quarter.

The group also maintained its forecasts for the full year.

“We continue to have confidence in the market in the medium to long term, but we are not going to just wait and pray that the market recovers soon,” its chief executive said. “We just don’t know when it will recover.”

He added that to revive the market, the industry needs to invest in faster mid-band frequency equipment to cope with the growth in data traffic.

“Only 25% of 5G base stations worldwide, outside of China, currently have mid-band,” he said.

In the third quarter, comparable net sales fell to 4.98 billion euros from 6.24 billion euros a year earlier and a forecast of 5.67 billion euros according to analysts surveyed by LSEG.

(Reporting by Supantha Mukherjee in Stockholm, Blandine Hénault and Dagmarah Mackos for the )

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