Finnish network operator, Nokia Corp. has disclosed Thursday an abrupt drop of seven percent in its quarterly earnings from its telecommunications and network equipment business, saying global demand for the aforementioned equipment remains weak.
The Finland-based network operator blamed the market saying it had become more challenging due to tough competition in China and consolidation among wireless carriers.
It said its operating profit dropped 23 percent to 334 million while its net loss was 192 million euros ($227 million) compared to 119 million euro loss a year earlier on network sales of 5.5 billion euros in the July to September period.
Network sales also dipped to nine percent in Q3 to 4.8 billion euros ($5.7 billion) against analysts’ forecast of five billion euros, while its operating profit was 432 million euros.
However, Nokia said it will pay a dividend of 0.19 euros per share from this year, up from 0.17 euros in 2016. Also, shares in the Finnish company dropped more than 11 percent in the early hours, where it competes with China’s Huawei and Sweden’s Ericsson, as forecasts are in that it would fall for a third straight year in 2018.
Rajeev Suri, the CEO of the company said the performance of Nokia’s patent licensing business was “the clear highlight of the quarter,” helping to boost the core networks business.
The telecom network equipment industry is currently undergoing the toughest part of a decade-long cycle, as global demand for 4G and older 2G and 3G network equipment subsides, while volume contracts for next-generation 5G networks remain a few years out.
According to Suri, the early positioning for 5G is well underway in the country and the cost of gaining or maintaining footprint is significant but the company wants to ensure the right long-term footprint, but not at any cost.
Formerly the world’s largest mobile phone maker, Nokia sold its mobile phone business to Microsoft in 2014 and has since focused on networks and patents.