Helsinki: Nokia Oyj named Rajeev Suri chief executive officer (CEO), picking the head of its networks division to chart the company’s future and revive growth after selling its mobile-phone business to Microsoft Corp.

Suri, 46, will start in the role on 1 May, Nokia said on Tuesday. The appointment ends a seven-month search for a replacement for Stephen Elop, who returned to Microsoft with the sale of Nokia’s handset unit for about $7.5 billion. Espoo, Finland-based Nokia also said it plans to spend about €5 billion on dividends, share buybacks and debt reduction.

By choosing Suri, 149-year-old Nokia is intensifying its focus on wireless-network equipment as it faces a new start without the phones that made it famous. Suri, who has run the network unit for four years, needs to challenge larger Ericsson AB and Huawei Technologies Co. to reverse falling equipment revenue, which accounts for about 90% of Nokia’s sales.

“He has a proven ability to create strategic clarity, drive innovation and growth, ensure disciplined execution, and deliver results," chairman Risto Siilasmaa said in a statement. His passion for technology will help ensure that Nokia continues to deliver innovations that have a positive impact on people’s lives.

Suri has spent almost 20 years in Nokia’s networks business, dealing with strategy, mergers and acquisitions, sales and marketing before becoming its head in 2009. An electronics and telecommunications engineer from Mangalore University in his home country India, Suri cut jobs and focused on more lucrative deals to boost earnings at the unit.

New Nokia

Nokia agreed to sell the phone division in September, after racking up losses of more than €5 billion over nine quarters. The deal, which includes patent-licensing fees, was completed last week.

Once the world’s largest smartphone maker with a market share topping 50%, Nokia dropped outside the top five with about 3% share as Apple Inc.’s iPhone and phones running Google Inc.’s Android software gained dominance.

With its market capitalization down to €19 billion from €300 billion in 2000, the challenge for Nokia is to once again find a new incarnation to revive its fortunes. Founded as a wood-pulp mill in 1865, Nokia’s transformations have included switches from rubber boots and toilet paper to cables, televisions, computers and mobile phones.

Shares of Nokia have advanced 73% since the sale to Microsoft was announced. They fell 2.2% to €5.14 on Monday in Helsinki.

Three businesses

Nokia has three businesses left after the phone-unit sale: the networks division, which made up 86% of Nokia’s adjusted operating profit in the fourth quarter, its maps business, and the unit responsible for licensing its patents.

Suri cut more than 25,000 jobs over the past two years to bring the network unit back to profit. Nokia said in January it expects the division’s adjusted operating margin this year to be toward the higher end of a range of 5% to 10%. Nokia said it plans to phase out the division’s old name, Nokia Solutions and Networks, or NSN.

Nokia’s top management team will consist of Suri, chief financial officer Timo Ihamuotila, maps chief Michael Halbherr, technology chief Henry Tirri, and Samih Elhage, the finance and operating chief of the networks unit. Juha Akras, head of human resources, Louise Pentland, its chief legal officer, and Kai Oistamo, the head of development, are leaving the company.

Dividends, buyback

Suri will also have a say on what Nokia does with its cash, which is swelling as the company receives the Microsoft proceeds. Nokia would have had €7.1 billion in net cash at the end of March had the deal been completed by then. The company said last week the proceeds may be slightly higher than the €5.44 billion originally agreed.

The company plans to pay about €800 million in ordinary dividends for last year and 2014, or 11 cents a share for 2013 and at least the same amount for this year. It also plans a one-time dividend of €1 billion, or 26 cents a share, to be paid on or about 3 July, and stock buybacks of €1.25 billion over two years.

Nokia also said it plans to reduce its debt by about €2 billion by the end of the second quarter of 2016 as it tries to bring its debt back to investment-grade status.

Nokia’s credit rating could be raised if it extends its track record of positive performance, while managing a conservative capital structure, Moody’s Investors Service said on 28 January. It could also face a downgrade if its capital structure significantly deteriorated through a major distribution to shareholders, Moody’s said.

Potential acquisitions

Nokia will have cash left over to invest in its businesses. The company could invest more in research and development and potentially acquisitions, Sami Sarkamies, an analyst at Nordea Bank AB in Helsinki, said last week. The network unit makes base stations, antennas and other equipment for wireless carriers and offers related services.

Nokia is seeking partnerships similar to a pact it has with Juniper Networks Inc. to expand its networks business, Suri said in an interview in February. Last year, Nokia considered buying the wireless-equipment unit of France’s Alcatel-Lucent SA, people familiar with the matter have said. Bloomberg