NEW DELHI: Telecom gear maker Nokia reported an 18% year-on-year decline in sales for the second quarter of 2024, largely due to weakened demand for 5G equipment in India. Pekka Lundmark, Nokia President and CEO, in the earnings call explained that the company's Q2 performance continued to suffer from market weaknesses, with net sales declining 18% year-over-year in constant currency terms. Lundmark noted that a key factor behind this decline was a challenging year-ago comparison period, which saw peak 5G deployment in India, with the country accounting for three-quarters of the sales drop.
“Our financial performance in the second quarter continued to be impacted by the ongoing market weakness with net sales declining 18% year-on-year in constant currency,” said Nokia President and chief executive officer (CEO) Pekka Lundmark.
In addition to the sales decline, Nokia reported a 32% decrease in second-quarter operating profit. Despite these challenges, the company remains optimistic about a sales recovery in the latter half of 2024, buoyed by anticipated orders from North America. Nokia’s adjusted profit, which excludes specific charges and asset revaluations for comparability with last year’s results, fell to 423 million euros ($462.38 million) from 619 million euros in the same period a year earlier.
India began its 5G network rollout in October 2022, with major telecom service providers like Reliance Jio and Bharti Airtel rapidly expanding their 5G infrastructure using equipment from Nokia, Ericsson, and Samsung. In less than two years, these providers have nearly completed nationwide 5G coverage, excluding Chinese telecom equipment. As a result, the pace of 5G deployment has slowed, leading to a reduction in equipment orders from India for both Nokia and Ericsson.
Last week, Ericsson also reported a 44% year-on-year decline in sales for Q2 2024 in the Southeast Asia, Oceania, and India market area. Ericsson’s sales in this region fell to 7.7 billion crowns (approximately Rs 6,116 crore) from 13.8 billion crowns (approximately Rs 10,961 crore) in the same quarter last year. Sequentially, net sales in this region decreased by 10%.
According to the Department of Telecommunications (DoT), approximately 446,000 5G BTS (base transceiver station) sites have been installed across India. However, the country’s third-largest telecom operator, Vodafone Idea Limited, has yet to launch its commercial 5G services. Both Nokia and Ericsson are expected to see a boost in purchase orders from India as Vodafone Idea prepares to roll out its 5G network.