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Business News/ Industry / Telecom/  Nokia open to divesting businesses to provide shareholder value
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Nokia open to divesting businesses to provide shareholder value

The company seeks equal access in the Indian market ahead of 6G rollout

Nokia merged its sales and marketing teams with its business units of mobile networks, network infrastructure, cloud and network services, across all geographies, which will help the company position itself for longer-term growth amid market uncertainty and in turn save between $850 million and $1.3 billion by 2026. (REUTERS)Premium
Nokia merged its sales and marketing teams with its business units of mobile networks, network infrastructure, cloud and network services, across all geographies, which will help the company position itself for longer-term growth amid market uncertainty and in turn save between $850 million and $1.3 billion by 2026. (REUTERS)

Barcelona: Finnish telecom gear maker Nokia is willing to move out of or divest businesses where it sees no road map for taking market leadership, said chief strategy and technology officer Nishant Batra in an exclusive interaction with Mint on the sidelines of the Mobile World Congress last week.

“We’re open to divesting certain businesses. We are looking at this portfolio all the time. If we divest a certain business, maybe as an exception, we'll keep some geography, but as a norm we will get out it, but we are not looking to divest major businesses," Batra said. The company divested from its joint venture with Huawei in China’s wireless technology firm TD Tech.

In response to a question on whether it will move out of segments where it isn’t leading, Batra said, “Either we are not leading, or we know that we can't lead. But there are businesses where we know we can lead. For instance, in optical business, we’re not a market leader, third largest globally, but the profile of the business is good, on the back of good product and geopolitics," he said.

His comments came in the backdrop of Nokia’s global restructuring in the fourth quarter last year where it overhauled operations, consolidated its major business of making network equipment, and laid off 14,000 people.

Nokia merged its sales and marketing teams with its business units of mobile networks, network infrastructure, cloud and network services, across all geographies, which will help the company position itself for longer-term growth amid market uncertainty and in turn save between $850 million and $1.3 billion by 2026. The changes were reflective in India as well, where about 200-250 people were reportedly laid off and Tarun Chhabra, head of mobile networks, was made the new India head, from April 2024.

The senior executive said that the steps were taken in the interests of shareholders, since the stock that was getting a conglomerate discount would now be better valued since investors would have clarity on the company’s structure as well as value of its individual businesses when compared to peers. A conglomerate discount is when markets value a group of businesses at less than the sum of its parts.

“We're trying to do is to give each unit full autonomy in operations, but also disclosures. We're trying to get to a structure where each business is capable of being valued by investors," Batra added.

The top executive also said that the Indian government should permit the Finnish technology provider to have preferential access to the market, where it has 19,000 people, Nokia’s largest resource globally, that are engaged in local manufacturing and local research and development.

“I would like to do much more in India and in certain markets, I don't have equal access. I would like to understand what would get me there, because for me, this market is very interesting, especially on 6G," Batra said. Nokia opened its 6G lab in its global R&D centre in Bengaluru in November.

The chief strategy and technology officer at Nokia lauded India’s efforts at making itself part of the initial discussions on 6G spectrum and standards setting globally. He noted that 6G deployments were expected between 2029 and 2031, with standards expected a couple of years before that. The Indian government has announced its 6G plans by 2030, through a vision document last year.

He also said that the geopolitical shifts will continue to provide tailwinds to Nokia as replacement of Chinese vendors' equipment across markets will continue in markets, similar to developments in markets like India, Australia and Japan. Chinese gear makers Huawei and ZTE used to have a major presence in Indian networks till 2020, when the government approved the National Security Directive on the Telecommunication Sector list that allowed only trusted products from trusted sources to be used by Indian telcos. Chinese equipment has been excluded from this list till date. Nokia and rival Ericsson have been major beneficiaries of this diktat. Telcos Reliance Jio and Bharti Airtel in India have almost entirely deployed their 5G networks on Nokia and Ericsson equipment.

India is among the top markets for Nokia where it has seen year-on-year increase in revenues through 2022-23 on the back of the lightning-paced 5G rollouts by Indian carriers, which CEO Pekka Lundmark has called 'remarkable' several times. The pace of 5G rollouts is expected to slow in 2024.

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ABOUT THE AUTHOR
Gulveen Aulakh
Gulveen covers both corporate and economy, and policy sections of Mint. She also covers telecom, IT from the corporate side and disinvestment, finance ministry from the economy side. Gulveen finds the rare mix of sectors she covers to be incredibly interesting.
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Published: 04 Mar 2024, 08:42 PM IST
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