
- Nokia ended 2024 on the up
- Fourth-quarter revenues grew by 9% year on year to almost €6bn thanks to its Network Infrastructure division and patent licensing deals
- Mobile Networks division was alone in not recording sales growth
- Vendor is to invest more in its IP routing portfolio to further capitalise on opportunities in the datacentre infrastructure market
Nokia is feeling pretty good about itself today after reporting a 9% like-for-like increase in fourth-quarter revenues to €5.98bn and a 38% year-on-year increase in operating profits to €1.14bn, thanks to growing demand for its IP routing, fixed broadband access and optical equipment (all part of its Network Infrastructure division) and a hike in sales by its Nokia Technologies division, which licenses the vendor’s patents to other companies.
The news gave Nokia’s stock a lift, with the Finnish company’s share price jumping by 6.9% to €4.60 on the Helsinki stock exchange, giving Nokia a market value of almost €26bn.
But the company is far from being out of the woods. While its Mobile Networks division is still its largest, it is the only part of Nokia that didn’t grow in terms of sales in the fourth quarter – that unit’s like-for-like revenues dipped by 2% year on year to €2.43bn.
Network Infrastructure, meanwhile, reported a 17% increase in like-for-like revenues to just over €2bn, Nokia Technologies reported a massive 85% hike in sales to €463m, and the Cloud and Network Services division (software, enterprise tech, managed services) reported a 7% increase in revenues to €1.05bn, citing growing demand for its standalone mobile core platform and enterprise wireless products as key drivers – Nokia now boasts 850 private mobile network customers.
Nokia’s management continues to talk up the capabilities of the Mobile Networks division, noting that it is still winning deals, including with new customers, and gaining market share in some markets. But there’s no escaping the fact that it is still suffering from some technology comparison challenges, has been trumped by key rival Ericsson in the important US market, most notable in recent times at AT&T, and has even been the subject of some potential divestment rumours. It needs some big wins and soon.
And there’s also no escaping that while Nokia had a comparatively good fourth quarter, the full year’s numbers reflected just how tough it has been as telcos cut back on spending. Nokia’s full year revenues of €19.2bn were down by 9% compared with 2023 sales, though efficiency measures meant that the full year operating profit of €2bn was a 20% improvement.
So can Nokia build on its fourth-quarter performance and have a better 2025? There are signs that telcos are starting to spend more, including in North America: Nokia saw this in the fourth quarter and Ericsson also noted it in its earnings report from last week.
But if that trend continues into this year, it still won’t move the needle that much. In line with other major vendors, Nokia doesn’t see much potential for sales growth in the telco sector – the new pot of gold is in the enterprise market and, for Nokia in particular, in the datacentre sector, which is growing significantly as more and more companies pump billions of dollars into existing and new facilities.
This is where its Network Infrastructure division gives Nokia strength in depth, and that muscle will be even greater when it completes the $2.3bn acquisition of optical networking rival Infinera, a deal that Nokia expects to close in the next couple of months. CEO Pekka Lundmark talked about the importance of Infinera to Nokia’s datacentre pitch during the vendor’s previous earnings conference call.
This time, he talked about how Nokia plans to invest more in its IP routing business to capture even more of the datacentre infrastructure market. The IP Networks part of the Network Infrastructure division reported a 24% year-on-year jump in sales in the fourth quarter to €822m, taking its full year revenues to almost €2.6bn. And it has business momentum: It is one of the leading players in the telco routing market and is growing its presence in the datacentre sector, where Nokia has teamed up with Lenovo and Kyndryl to extend its partnership sales potential.
To seize on that growing potential, Lundmark noted during the fourth-quarter webcast early on Thursday that Nokia “will accelerate our investment in our IP networks business. We will invest up to an additional €100m of annual operating expenses with a view to generating incremental net sales of €1bn by 2028. Nokia’s IP network products are well known in the [telco] market for their quality, robustness and innovation. We will look to bring this strong and proven reputation for quality to the datacentre market and combine it with new market-leading automation capabilities from our event-driven automation solutions and our SR [service router] Linux operating system.”
Lundmark cited the recent expanded deal with Microsoft as an example of the kind of IP Networks deals Nokia is relying on for significant future growth.
So as Nokia reports on its progress during 2025 and beyond, expect to hear more about datacentre sector advances, enterprise networking deals, the vendor’s network API/telco-as-a-platform portfolio (which it dubs Network as Code) and, probably, less about major developments and opportunities with its traditional mobile network infrastructure lines.
- Ray Le Maistre, Editorial Director, TelecomTV
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