Nokia India Q2 net sales down 68% on lower 5G investments by top telcos

Nokia India reported a 68 percent year-on-year decline in net sales at 329 million euros in the April-June quarter, hitting the Finnish telecom gear maker’s overall numbers.

The company attributed the sharp drop in India to a reduction in 5G network investments by Reliance Jio and Bharti Airtel.

“Our financial performance in the second quarter continued to be impacted by the ongoing market weakness, with net sales declining 18 percent year-on-year in constant currency. The most significant impact was the challenging year-ago comparison period, which saw the peak of India’s rapid 5G deployment with India accounting for three-quarters of the decline,” Nokia president and chief executive officer Pekka Lundmark said in a statement on July 18.

The gear vendor also said its third-quarter will show the impact of its recent agreement with Vodafone Idea to settle outstanding dues and convert them to an equity stake in the telco.

Vodafone Idea’s shareholders approved the transaction in July, and the equity stake is subject to a six-month lock-up period.

In Q2 2024, Nokia’s overall net sales dropped 18 percent on a reported and a constant currency basis. Mobile Networks’ net sales decreased 24 percent, primarily driven by India. North America benefited from the resolution of the outstanding contract negotiation with AT&T. Cloud and network Services net sales, however, fell 16 percent.

“The net sales decline was primarily driven by a decrease in India, reflecting the fact that Q2 2023 represented the peak of the
India 5G deployments. Positively, on a sequential basis, all regions increased compared with Q1,” Nokia said.

Nokia’s European rival Ericson also reported a 44 percent year-on-year decline in sales for the June quarter in the Southeast Asia, Oceania, and India market region on July 12.

The decline was primarily due to a significant reduction in operator capex investments in India following a year of record-high investment levels in 2023.

Ericsson reported that net sales were down 10 percent sequentially for the market region.

The company said network sales declined primarily in India, as investment levels normalised after a record run in 2023. India’s contribution towards Ericsson’s global sales decreased drastically from 14 percent in 2023 to six percent in the second quarter of 2024.

Reliance Jio and Bharti Airtel have completed their pan-India 5G deployments, which impact Ericsson and Nokia’s market growth. Both vendors supply Jio and Airtel with 5 G equipment.

Both companies are in talks to secure fresh 4G and 5G equipment orders from Vodafone Idea, which will kick off a network expansion exercise following a successful follow-on offer in the coming months.