Nokia the latest to exit Russia, adding to the woes of the country’s mobile operators
- Ericsson already announced its indefinite suspension of business in Russia
- Now Nokia says it is exiting the Russian market completely
- Even Huawei has reportedly suspended supplies, though for different reasons
Russia’s mobile operators have been left in a precarious position as a result of President Putin’s decision to wage war on Ukraine, as the three major suppliers of mobile network infrastructure have either permanently or at least temporarily stopped shipments to the company and suspended or closed down operations in the country.
Nokia has announced it will “exit the Russian market,” noting in an announcement issued on Tuesday morningthat it “has been clear for Nokia since the early days of the invasion of Ukraine that continuing our presence in Russia would not be possible. Over the last weeks we have suspended deliveries, stopped new business and are moving our limited R&D activities out of Russia.”
The Finnish vendor says Russia accounted for about 2% of its total business and that the decision will lead to a financial “provision” of about €100 million in its first quarter 2022 financials, but that the move doesn’t affect its ability to hit its full year targets.
Nokia’s news followed in the wake of Ericsson’s decision, reported on Monday, to pull out of Russia “indefinitely... in light of recent events.” It is “engaging with customers and partners regarding the indefinite suspension of the affected business. The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” noted Ericsson. Its first quarter numbers will be impacted by about €87 million.
Those moves left the door open for Huawei to snap up new business with the likes of MTS, MegaFon, Beeline (VEON) and Tele2 Russia (owned by Rostelecom since March 2020 and no longer part of Tele2 AB). MTS is the market leader with 80 million mobile customers, followed by Megafon (74 million), Beeline (49 million) and Tele2 Russia (47 million): TMT Consulting estimated the value of Russia’s telecoms services sector to be worth 1.8 trillion rubles (almost €20 billion).
But a report from Forbes Russia suggests Huawei has also suspended sales in Russia and sent non-Chinese staff in the country on vacation for a month. Its reasons for doing so, though, are different from those of its European rivals. While Ericsson and Nokia have joined the throng of companies pulling out of economic activity in Russia in protest against the invasion of Ukraine, Huawei is concerned it might face sanctions from the US if it continues to provide equipment to Russian customers (and Huawei already knows the impact that US sanctions can have...).
According to the Forbes report, Huawei is now reviewing its product line to see what it might be able to ship to Russia without incurring the wrath of the US: With that in mind, Huawei and its fellow Chinese mobile infrastructure vendor ZTE might fancy their chances of picking up business in Russia in the long term, though there’s always the chance that in the 5G era they might encounter competition from India, which (at least currently) has not cut off ties with Russia and which is aiming to develop its own home-grown comms networking infrastructure industry to drive exports as well as for domestic use. There’s also the possibility of shifting to virtual and Open RAN-based systems, which MTS has been checking out and which can be sourced from non-traditional vendors.
None of this will help the Russian mobile operators in the short term, as any inventory they might have will only last so long and, more painfully, they will now miss out on support services and upgrades from Ericsson and Nokia for their macro, wide area networks and emerging private network deployments.
And of course it won’t help the Russian economy either, which by all accounts is set for a crippling blow this year and which looks set to be further compounded by a brain drain that will also impact Russia’s telcos.
Vladimir Putin’s decision to invade Ukraine looks set to have a woeful impact on Russia as well as on its put-upon neighbour.
- Ray Le Maistre, Editorial Director, TelecomTV
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