Research Update: Nokia Corp. Upgraded To 'BBB-' Following Improved Performance Prospects; Outlook Stable

Telecommunications equipment vendor Nokia's performance was strong across all segments in 2022 and we expect further improvements in EBITDA and free operating cash flow (FOCF) over 2023-2024 thanks to the expected growth of some addressable markets, its competitive product portfolio, cost efficiencies generated as part of the restructuring program, and scale benefits. We acknowledge the telecom equipment industry remains volatile, notably dependent on economic factors that could affect revenue, profitability, and FOCF in 2023-2024. However, in our view, Nokia's product competitiveness, market position, and cost structure are sufficient to achieve EBITDA margins of 14%-16% and annual FOCF after leases of above €800 million in the next two years. We therefore raised our long-term issuer credit rating on Nokia and issue

...- Telecommunications equipment vendor Nokia's performance was strong across all segments in 2022 and we expect further improvements in EBITDA and free operating cash flow (FOCF) over 2023-2024 thanks to the expected growth of some addressable markets, its competitive product portfolio, cost efficiencies generated as part of the restructuring program, and scale benefits. - We acknowledge the telecom equipment industry remains volatile, notably dependent on economic factors that could affect revenue, profitability, and FOCF in 2023-2024. - However, in our view, Nokia's product competitiveness, market position, and cost structure are sufficient to achieve EBITDA margins of 14%-16% and annual FOCF after leases of above 800 million in the next two years. - We therefore raised our long-term issuer credit rating on Nokia and issue ratings on its unsecured debt to '###-' from '##+' and affirmed the 'A-3' short-term issuer credit rating. - The stable outlook reflects our expectation that Nokia will...

Research Update