Nokia Oyj
PSE:NOKIA
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Nokia Oyj
Nokia Oyj is a telecom equipment company. It designs and sells the hardware and software that mobile carriers and network operators use to build and run phone networks, including radio access gear, core network systems, network management software, and related services. It also sells networking products for fixed-line broadband and private wireless networks, so it sits in the middle of the communications infrastructure that connects phones, homes, factories, and businesses. Its main customers are mobile operators, internet service providers, governments, and large enterprises that need secure, reliable networks. Nokia makes money by selling equipment, licensing software, and providing long-term support, integration, and network services. In some areas it also earns royalty income from its technology and patents, which gives it a different mix than a pure hardware supplier. What makes Nokia’s business model distinctive is that it helps other companies build the backbone of telecom networks rather than selling directly to consumers. Its work is tied to long project cycles, technical standards, and ongoing maintenance, so customer relationships tend to be sticky and service-heavy. That makes Nokia an important supplier in the telecommunications value chain, with a business built around infrastructure, software, and intellectual property rather than retail products.
Nokia Oyj is a telecom equipment company. It designs and sells the hardware and software that mobile carriers and network operators use to build and run phone networks, including radio access gear, core network systems, network management software, and related services. It also sells networking products for fixed-line broadband and private wireless networks, so it sits in the middle of the communications infrastructure that connects phones, homes, factories, and businesses.
Its main customers are mobile operators, internet service providers, governments, and large enterprises that need secure, reliable networks. Nokia makes money by selling equipment, licensing software, and providing long-term support, integration, and network services. In some areas it also earns royalty income from its technology and patents, which gives it a different mix than a pure hardware supplier.
What makes Nokia’s business model distinctive is that it helps other companies build the backbone of telecom networks rather than selling directly to consumers. Its work is tied to long project cycles, technical standards, and ongoing maintenance, so customer relationships tend to be sticky and service-heavy. That makes Nokia an important supplier in the telecommunications value chain, with a business built around infrastructure, software, and intellectual property rather than retail products.
Sales and margins: Nokia said second-quarter net sales grew 9%, with gross margin up 70 basis points to 46% and operating margin up 70 basis points to 9%. Management said the quarter was helped by strong network infrastructure and timing of some software revenue.
AI demand: AI and cloud was the standout growth driver, with sales more than doubling year-on-year to EUR 446 million and order intake reaching EUR 2.8 billion, though management warned the order flow can be lumpy and some of it reflects long-term supply reservations.
Outlook: Nokia kept its operating profit guidance unchanged and said it remains on track to finish somewhat above the midpoint. For Q3, it expects sales to rise 3% to 7% sequentially and operating profit to be broadly similar to Q2 before improving in Q4.
AI-RAN push: The company launched its first commercial AI-RAN platform and said pilots should start at the end of 2026 with commercial availability in 2027, while more meaningful volume is expected in 2028.
Supply constraints: Management said optical supply is constrained, especially for leading-edge products, and highlighted memory, printed circuit boards and indium phosphide as major industry bottlenecks.
Capital allocation: Nokia announced the purchase of an Arizona manufacturing site from NXP and continued investment in U.S.-based optical capacity, while also moving to sell non-core fixed wireless access assets.
Cash and costs: Free cash flow was negative EUR 732 million in the quarter, and Nokia now expects to trend toward the low end of its 55% to 75% free cash flow conversion range because of restructuring and working-capital needs.
