Nokia head says 'we don't have a 5G problem' while market fears it is lagging behind

Last month Nokia cut its outlook for this year and next because of the need to step up its investments in 5G.


The head of Nokia's software business Bhaskar Gorti defended the Finnish mobile network maker on Wednesday against market fears that it is lagging behind its peers Ericsson and Huawei in 5G development.

"I don't think we have a 5G problem," Gorti told Reuters in an interview, calling its development a marathon where a lot of focus had been put on the first ten minutes of the race.

Last month Nokia cut its outlook for this year and next because of the need to step up its investments in 5G — news that knocked a third off its share price.

It also suspended dividend payments to conserve cash and pledged to hurry up the introduction of new 5G chipsets.

(Also read: Huawei says it has sold 200 million devices in 2019, took 64 more days to touch this target in 2018)

Nokia head says we dont have a 5G problem while market fears it is lagging behind

The operating profit from Nokia's software business grew 108 percent to 156 million euros ($172.6 million) year-on-year in the third quarter. Image: Reuters

That was in sharp contrast to Sweden's Ericsson, which had lifted its market forecast for this year and its sales target for 2020 just a week earlier.

Nokia was wrong-footed by waiting for 5G radio standards to enter force late last year, while rivals were quicker to revamp products in anticipation of early rollouts in the United States and Korea, industry sources and analysts told Reuters.

Amit Hirchandani, sector analyst at Citi in London, calls Nokia a "show me" story in which it must demonstrate clear progress on fixing and deploying its 5G products in the coming months to restore investor confidence.

Gorti said the 5G cycle consisted of several different parts, adding he believed Nokia to be ahead its peers in aspects such as software development, internet of things deployments or wireless access.

"I personally think we have a at least 2 to 3 years or more lead on our nearest competitor Ericsson (in software)," he said.

The operating profit from Nokia's software business grew 108 percent to 156 million euros ($172.6 million) year-on-year in the third quarter, topping the profit from Nokia's long-time main business the networks at 128 million for the quarter.

Gorti said it was important to understand that 80 percent of the mobile network is actually software and that the virtualisation of networks would only speed up for new 5G networks.

 

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