Nokia reported a lower-than-expected profit for Q1 2025, with a comparable operating profit of 156 million euros (US$177.05 million), far below the 243.83 million euros (US$276.73 million) forecasted by analysts.

The company attributed this to a one-time charge of 120 million euros (US$136.19 million)in its mobile networks division, which hurt margins.

Net sales reached 4.39 billion euros (US$4.98 billion), a 3% decline on a constant-currency basis.

The company also highlighted potential challenges from US tariffs, estimating a 20 million euros (US$22.7 million) to 30 million euro (US$34.05 million) reduction in its Q2 profit.

Despite steady growth in North America, Nokia faces increased competition from Ericsson and concerns about tariff impacts, such as delayed orders.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Tariffs disrupt telecom equipment supply chains with uneven impact

Trump’s blanket 10% tariff on all U.S. trade partners (with higher rates for countries like China at 34% and EU at 20%) is creating significant disruption across telecom supply chains 1.

The 20-30 million euro Q2 impact Nokia forecasts appears moderate compared to broader economic projections, with the April 2nd tariff announcement alone expected to raise consumer prices by 1.3% (equivalent to $2,100 per household) 2.

While companies like Nokia and Ericsson have established local manufacturing presence providing some protection against tariffs 1, Nokia’s specific warning shows that even multinational companies with diversified production aren’t fully insulated from trade policy shifts.

The telecom sector faces particular challenges as equipment costs rise, potentially forcing carriers to increase service prices and dampening infrastructure investment during a critical period of 5G expansion 1.

This adds a new dimension of uncertainty for telecom investors already navigating a challenging spending environment.

2️⃣ Shifting competitive dynamics in telecom equipment market

Nokia’s challenges come amid a significant reshuffling in the telecom equipment market, with Huawei reporting 22% growth reaching approximately $118 billion in 2024, while both Nokia and Ericsson saw sales decline by 9% and 6% respectively 3.

Nokia’s statement that it’s growing in North America despite losing market share to Ericsson highlights the intensely competitive landscape where regional strength doesn’t necessarily translate to overall market position.

Recent Nokia developments