A collapse in sales of 5G network products has been a painful experience for staff at Ericsson and Nokia. Since 2022, when its headcount topped 105,000 after takeovers, Ericsson has slashed almost 17,000 jobs, finishing last year with fewer than 89,000 employees. The program of layoffs is not over. “We expect to continue reducing headcount,” said CEO Börje Ekholm on January 23.
Rival Nokia is now even smaller than that, despite competing not just in mobile but also in the fixed broadband, Internet Protocol (IP) and optical equipment sectors. In 2018, two years after acquiring Alcatel-Lucent, it employed about 103,000 people. By the end of 2024, nearly 27,500 jobs had disappeared, leaving it with a total headcount of 75,600.
Nokia appeared to hit an emergency brake in 2025, trimming its workforce by just 1,500 roles last year to end it with around 74,100 employees, according to its just-published annual report. Add US optical equipment maker Infinera, acquired about a year ago and excluded from the year-end tally, and headcount would probably have risen. Nokia reported a year-average figure of 78,005 employees, a difference of 3,905 with the lower year-end amount. But the axing looks set to persist.
Mobile damage
Automation and AI may be having some impact, allowing the Nordic vendors to achieve the same results with fewer people. Yet, across both companies, job losses partly reflect a massive slump in 5G spending by telcos. In 2022, operators worldwide collectively spent $45 billion on radio access network (RAN) products, according to analysts at Omdia, a Light Reading sister company. Expenditure fell to $40 billion in 2023 and $35 billion in 2024, remaining at that level in 2025. For all the recent hubbub about AI-RAN, nobody expects real growth.
Circumstances have been far worse for Nokia. While both European firms have been losing market share in China – replaced there by Huawei and ZTE, the local alternatives – Nokia has also suffered major setbacks in North America, widely regarded as the world’s most profitable 5G market. In 2020, Verizon, a Nokia customer in 4G, switched to Samsung for its 5G rollout and has stuck with it ever since. Three years later, AT&T opted to rely exclusively on Ericsson and replace Nokia across a third of its footprint.
Despite job cuts so far, all this damage left Nokia’s mobile networks business group (MN) with an operating margin of just 2.8% last year, down from 8.8% in 2022. Under pressure to show an improvement, CEO Justin Hotard, who took over in April last year, confirmed at Nokia’s capital markets day (CMD) in November that overall cuts will be at the top end of the range announced by his predecessor Pekka Lundmark in late 2023. That means cutting 14,000 jobs by the end of this year from a workforce of 84,000 employees when Lundmark’s program was unveiled. The aim is to reduce annual costs by €1.2 billion (US$1.4 billion), roughly 15% of personnel expenses.
The workforce number originally cited, and reproduced in Nokia’s latest annual report, was 86,000. The discrepancy of 2,000 appears to be explained by the divestment of Nokia’s submarine networks business in 2024. But that would mean it does not count toward the target. As implied by a presentation at the CMD (slide 77 of this deck), Nokia would be shrinking its headcount to just 70,000, plus Infinera, rather than the 72,000 originally shown. To achieve his goal, Hotard must therefore cut about 4,100 jobs this year, another 6% of the December total.
Accomplishing that without weakening Nokia is the challenge. The first 6,000 job cuts executed by Lundmark were focused on MN, Nokia’s former boss told Light Reading in July 2024. “We have gone from at the end of the third quarter last year around 86,000 to below 80,000 and most of that decline has been in mobile networks,” said Lundmark at the time.
Despite this, MN looked barely profitable last year and was already spending far less on research and development (R&D) than Ericsson. Indeed, spending by MN fell by 4% last year, to less than €2.08 billion ($2.4 billion), while spending across MN, Nokia Technologies and cloud and network services came to roughly €2.95 billion ($3.41 billion). Ericsson, with its focus on 5G, spent about 48.9 billion Swedish kronor ($5.2 billion) at group level. Nokia should have benefited from Nvidia’s $1 billion investment, secured last October. But while this added €859 million to its net cash, the year-over-year increase in MN’s R&D outlay for the final quarter was measly.
Hotard will obviously look to make cuts by collapsing MN, Nokia Technologies and cloud and network services into a single mobile infrastructure (MI) business group this year. The controversial plan, known to have been unpopular with some senior executives, should allow Nokia to eliminate various overlapping roles and reduce costs. A few underperforming units, including some private 5G and microwave assets, may be sold. But the restructuring might also obscure the performance of the main constituent parts, hiding the details of MN’s profits (or losses) from investors.
Separately from this, Hotard has also been reversing out of the Lundmark scheme that had given each business group greater autonomy, with its own critical support functions. That has meant extracting finance, HR, communications and marketing, and legal functions from those groups and merging them into a single unit serving both MI and network infrastructure (NI, comprising the fixed, IP and optical parts of Nokia) in future. Comms staff previously focused on a specific sector now cover everything that Nokia does. The resulting overlap brings a clear opportunity to cut jobs.
Optical limits
Elsewhere in NI, workforce shrinkage would be difficult despite the merger of Infinera with Nokia’s existing optical unit. The rationale for paying $2.3 billion to acquire Infinera was largely about scale. Before the deal went through, Infinera generated the bulk of its revenues in North America, while Nokia sold mainly to other regions. Infinera developed products based on indium phosphide. Nokia specialized in silicon photonics. The lack of overlap might have explained why Nokia was anticipating just €200 million ($231 million) in “synergies” across businesses with a combined cost base of more than €3 billion ($3.5 billion), according to Lundmark’s estimate at the time.
Infinera had about 3,400 employees before the acquisition, according to its filings with the US Securities and Exchange Commission. Whatever the current number, it is always excluded from total headcount in Nokia’s statements about the ongoing cost-saving program that Lundmark initiated. That suggests Infinera, if not the whole of Nokia’s optical business, is exempt from those cuts.
As at MN, Hotard will also be concerned about making cuts when Nokia is still perceived to be second best, after Ciena. Undoubtedly, optical represents Nokia’s most attractive immediate opportunity for sales growth as AI data centers pour money into connectivity. But its optical unit managed an organic sales increase of just 14% last year, reporting about €3 billion ($3.5 billion) in revenues, while Ciena grew sales by 19%, to nearly $4.8 billion. Ciena’s R&D budget of about $848 million also went almost entirely into optical technologies. While NI’s expenditure of roughly €1.5 billion ($1.7 billion) was double that amount, it would have been split between optical, IP and fixed broadband.
A turnaround at MN – now the main component of MI – would ease the pressure on Hotard. But despite forecasting an increase in mobile traffic between now and 2028, he does not expect the addressable market to grow from its current size of about €39 billion ($45.1 billion) in annual product and service revenues over this period (slide 64 of the CMD deck). Any sales increase in this environment would have to come from market share gains.
Even growth in market share might not deliver the improvement Nokia so desperately needs in profitability. The real prize would be new deals with AT&T and Verizon, the US telcos that Nokia has lost as mobile customers since the launch of 5G. Neither seems likely to return before the arrival of 6G in 2030. Now all-in with Ericsson, AT&T is still replacing Nokia’s radios. Yago Tenorio, Verizon’s chief technology officer (CTO), has objected to the use of graphics processing units (GPUs) in the RAN, as Nokia proposes. “I think that’s a complication that I’m not sure we need, because GPUs are very expensive,” he told Light Reading in October.
Other CTOs are similarly skeptical about inserting GPUs into the RAN, and products are still not ready. The danger stems from customer uncertainty about Nokia’s commitment to its existing range of purpose-built 5G products. Nokia has tried to address this by insisting the Nvidia partnership is additive, not a replacement.
“It’s an expansion of our portfolio,” insisted Pallavi Mahajan, Nokia’s CTO, when recently asked if it would close the purpose-built development track. “It provides us with the ability to have our custom silicon along with Nvidia’s GPUs.” But even if some resources can be shared, maintaining two tracks will be more expensive than having one. As economic realities bite, it will not be the Nvidia program that is at risk.
Source – https://www.lightreading.com/5g/nokia-is-cutting-thousands-more-jobs-this-year