It’s been widely assumed that Nokia lost a $6.6 billion 5G contract with Verizon this fall, when the U.S. carrier instead chose Samsung. Nokia’s CEO Pekka Lundmark addressed the Verizon relationship today when he was giving a Nokia investor relations update.
“When it comes to Verizon, we have to remember that they will continue to be among our top three customers, also going forward,” said Lundmark. “There are a lot of opportunities. We actually published a dynamic spectrum sharing software deal with them. We continue to work with them in many segments. We also recently published a 5G private wireless deal with them as well. So we do not at all see it as we would somehow be excluded from some of the segments with them going forward. We are also very strong on the software side with the core network.”
Lundmark, who became CEO in August, also talked extensively today about his corporate restructuring of Nokia, where he’s collapsing the company into four business units and downsizing the corporate leadership team.
The current corporate team consists of 17 people. But in January 2021, that team will be reduced to 11. Top executives who’ve already announced their departures include Chief Marketing Officer Barry French, CTO Marcus Weldon and President of Global Services & Nokia Operations Sanjay Goel.
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Lundmark said, “I fully understand if those members of the current team who will not have seats in the future leadership team, if they want to do something else. I respect that. Many of them have worked for us for a long time and so also from their point of view it may be time for a change.”
As part of the more simplified organizational structure of the company, 14,000 full-time employees will be reassigned from corporate to the new business groups. And then, as part of a phase two of the reorganization next year, each of the business group leaders will decide who stays and who goes in their group.
Nokia CFO Marco Wiren said the business group presidents will “have the power and ability to assess the whole of their business and see what capabilities do they need and what is the cost-basis they believe is optimal for them.”
The four new business units are:
- Mobile Networks led by Tommi Uitto
- Network Infrastructure led by Federico Guillen
- Cloud and Network Services led by Raghav Sahgal
- Nokia Technologies led by Jenni Lukander
The Mobile Networks business unit includes everything related to mobile networks, excluding the core, which will be part of the Cloud and Network Services business. The unit is on a recovery trajectory ever since the ReefShark fiasco in 2019 when Nokia admitted that it made a bad call on 5G chips and was quickly trying to rectify the situation.
Of the 2021 outlook for the Mobile Networks business, Lundmark said, “The expected profitability in this business next year will be around zero. There are growth pockets inside this market. Enterprise wireless is clearly something that is expected to grow much faster than the overall market. Over time we also expect that the open RAN and vRAN segments will be growth drivers.”
Lundmark said the Network Infrastructure business unit — which includes IP and fixed networks as well as optical and submarine networks — will benefit from 5G deployments because new edge cloud architectures will require more capacity in backhaul, midhaul and fronthaul connections. He said, “This will lead to a lot of investments by the owners of the networks.”