Research Update: Nokia Outlook Revised To Stable On Positive Free Cash Flow Generation; 'BB+' Rating Affirmed

Telecom equipment vendor Nokia's free operating cash flow (FOCF) significantly improved in 2020, and we expect it will remain positive in 2021 and 2022. The improvement primarily stems from a stronger EBITDA margin thanks to fewer nonrecurring items, and we project that margins could strengthen further through 2022. We expect that Nokia's revenue growth will be flat in 2021 on a constant currency basis, as fierce competition and price pressure in the mobile network market are balanced by growth in the network infrastructure and technology segments. We are therefore revising our outlook on Nokia to stable from negative, and affirming our 'BB+/A-3' ratings on Nokia and our 'BB+' rating on its unsecured debt. The stable outlook reflects our expectations that

...- Telecom equipment vendor Nokia's free operating cash flow (FOCF) significantly improved in 2020, and we expect it will remain positive in 2021 and 2022. - The improvement primarily stems from a stronger EBITDA margin thanks to fewer nonrecurring items, and we project that margins could strengthen further through 2022. - We expect that Nokia's revenue growth will be flat in 2021 on a constant currency basis, as fierce competition and price pressure in the mobile network market are balanced by growth in the network infrastructure and technology segments. - We are therefore revising our outlook on Nokia to stable from negative, and affirming our '##+/A-3' ratings on Nokia and our '##+' rating on its unsecured debt. - The stable outlook reflects our expectations that Nokia will post positive S&P Global Ratings-adjusted FOCF of at least 500 million annually in 2021 and 2022, supporting leverage remaining below 1.5x, FOCF to debt above 15%, and funds from operations (FFO) to debt of above 60%....

Research Update