Nokia Corp.

Overview Key strengths Key risks No. 2/No. 3 position (tied with Ericsson) in the global telecommunications network equipment market, including a No.2 position with a 24% share in 4G/5G excluding China (No. 3 with a 15% share incl. China). Limited visibility of long-term topline growth due to cyclical demand for telecom equipment, historically leading to volatile free operating cash flow (FOCF). Diversified and highly competitive product portfolio across mobile, fixed-line, core, access networks, software, and enterprises, thanks to consistently appreciable R&D investments (18% of sales). Strong competition, primarily from Ericsson and Huawei, and bargaining power from customers creating price pressure. Geographically diverse revenue base, with presence in 130 countries. Pressured profitability in 2023; we expect S&P Global Ratings-adjusted EBITDA margins

...We anticipate about 3% revenue decline in 2023, followed by 0%-2% annual growth in 2024- 2025. In the second quarter of 2023, macroeconomic challenges squeezed Nokia's revenue. Customers temporarily postponed spending to preserve cash flows, and there were inventory adjustments after the stock buildup initiatives taken during the chain constraints in 2022. We anticipate a similar trend for the second half of 2023. This will lead to a topline decline of about 3%, driven by both mobile networks and networks infrastructure. In the longer term (2024-2025), we expect Nokia to report flat to slightly growing revenue. This will derive support from optical and internet protocol (IP) networks, benefitting from the hybrid working environment and expansion in enterprise customer type through progress in web scale and private wireless. We anticipate relatively flat mobile equipment market globally for the next couple of years, which Nokia could offset by some market share gains across segments. Weak...

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