Nokia's Visionary Strategy for a Connected Future
Nokia Corporation is embracing a bold new strategy aimed at positioning itself as a frontrunner in the AI-driven transformation of connectivity. By focusing on innovation, the company seeks to capture the immense value generated by the ongoing AI supercycle. Announced during its Capital Markets Day, this comprehensive plan includes new long-term financial targets, strategic KPIs, and significant changes to its Group Leadership Team.
Streamlined Operational Model to Enhance Efficiency
To better align with customer needs and enhance its innovation capabilities, Nokia will simplify its operational structure. Effective January 1, 2026, the company will operate under two primary segments: Network Infrastructure and Mobile Infrastructure. This evolution reflects Nokia's commitment to adapt to the increasing demand for advanced connectivity solutions propelled by AI.
The Network Infrastructure Segment
The Network Infrastructure segment is poised for remarkable growth as it aims to leverage the global expansion of AI technologies and data centers. This unit will continue to serve its telecommunications customer base while innovating new solutions tailored to their needs. David Heard will continue leading this segment, ensuring its focus remains sharp and growth-oriented.
Mobile Infrastructure's Innovative Direction
Nokia's new Mobile Infrastructure segment will combine its core networks, radio networks, and technology standards under a unified approach aimed at achieving leadership in AI-native networks and emerging 6G technology. This segment will provide a sturdy foundation, fueled by mobile communication technologies grounded in 3GPP standards, generating robust cash flow thanks to IP licensing potential. Justin Hotard will lead this transformation on an interim basis.
Transforming Leadership for Future Success
Along with structural changes, Nokia is reconfiguring its leadership team to better drive its strategic vision. Starting January 1, 2026, Raghav Sahgal will assume the role of Chief Customer Officer, aiming to enhance the customer experience across all service areas. Patrik Hammarén will lead Technology Standards effectively, reflecting the importance of technology in Nokia’s future operations. Changes in leadership also include Tommi Uitto stepping down from the Group Leadership Team.
Establishing a Dedicated Unit for Portfolio Businesses
Nokia's review of its business portfolio has led to the strategic decision to relocate several non-core units into a newly established Portfolio Businesses segment. This decision enables the organization to identify the best value creation opportunities for these units. As work continues, Nokia is committed to ensuring that customer service remains uninterrupted.
Details on New Portfolio Units
The following units will be moved to the Portfolio Businesses segment:
- Fixed Wireless Access CPE
- Site Implementation and Outside Plant
- Enterprise Campus Edge
- Microwave Radio
These segments generated approximately EUR 0.9 billion in net sales over the past year, although they reported an operating loss of EUR 0.1 billion. Nokia will focus on continuing support for employees and customers throughout this transition period.
Nokia Defense: A New Frontier
Nokia is also launching a new incubation unit known as Nokia Defense. This initiative aims to centralize the company's go-to-market and research and development efforts for its defense portfolio. By building on a solid foundation with Nokia Federal Solutions in the U.S., the company is excited about the opportunities it sees in various regions, including the U.S. and allied nations, to deliver cutting-edge defense solutions.
Long-Term Financial Goals and Strategic KPIs
The announcement also introduces ambitious long-term financial targets, with aspirations to achieve comparable operating profits of between EUR 2.7 billion to EUR 3.2 billion by 2028. This goal represents a significant increase from the EUR 2.0 billion identified in previous assessments. Nokia aims to adopt tailored strategic KPIs, which specifically highlight expected outcomes from their revised strategy.
Key Performance Indicators for Success
Some of the pivotal KPIs that will guide Nokia's operational success include:
- Net Sales Growth in Network Infrastructure: Aiming for a compound annual growth rate (CAGR) of 6-8% from 2025 to 2028, with an especially robust 10-12% target for Optical Networks and IP Networks.
- Operating Margin in Network Infrastructure: Targeting an operating margin range of 13-17% by 2028.
- Gross Margin in Mobile Infrastructure: Anticipating a gross margin of 48-50% by 2028.
- Operating Profit in Mobile Infrastructure: Expected growth from a base of EUR 1.5 billion.
- Reduction of Common and Other Operating Expenses: A goal to reduce operating expenses to EUR 150 million, down from EUR 350 million.
- Free Cash Flow Conversion: Projected conversion from comparable operating profit between 65% and 75%.
Looking Ahead to 2026 and Beyond
With these new segments established from January 1, 2026, Nokia anticipates reporting its financial results under this new framework in the first quarter of 2026. Recap financial details for 2024 and 2025 will also be provided to give a clear picture of the company’s new reporting structure.
Nokia's Commitment to Innovation
As a pioneer in connectivity for the AI era, Nokia is dedicated to advancing technologies across fixed, mobile, and transport networks. The innovation from Nokia Bell Labs fuels our mission to enhance connectivity and create better solutions for our customers and the global community.
Contact Information for Inquiries
If you have any inquiries, please reach out to Nokia Communications at +358 10 448 4900 or via email at press.services@nokia.com. For investor relations, contact +358 931 580 507 or email investor.relations@nokia.com.
Frequently Asked Questions
What is Nokia's new operational model?
Nokia's new operational model will focus on two segments: Network Infrastructure and Mobile Infrastructure to enhance customer alignment and innovation.
What are the long-term financial targets for Nokia?
Nokia aims to achieve a comparable operating profit of EUR 2.7 billion to EUR 3.2 billion by 2028.
How will Nokia Impact AI and 6G technology?
Nokia plans to lead in developing AI-native networks and 6G technology, making significant strides in connectivity solutions.
What changes will occur in Nokia's leadership team?
Nokia will see leadership changes, including Raghav Sahgal becoming Chief Customer Officer and Patrik Hammarén leading Technology Standards.
What is Nokia Defense?
Nokia Defense is a newly created incubation unit focusing on delivering defense-grade solutions based on Nokia's core technologies, expanding into global markets.
