Nokia quits Russia, anticipates no hit to financial outlook

A day after rival Ericsson announced it was suspending its business in Russia indefinitely, Nokia said it’s completely taking its business out of the Russian market.

"We just simply do not see any possibilities to continue in the country under the current circumstances," Nokia CEO Pekka Lundmark told Reuters.

The move comes after Nokia suspended deliveries, stopped new business and moved its R&D activities out of Russia, which invaded Ukraine on February 24.

“It has been clear for Nokia since the early days of the invasion of Ukraine that continuing our presence in Russia would not be possible,” Nokia stated. “We can now announce we will exit the Russian market.”

Nokia released a lengthy statement last month after The New York Times published an article saying the company played a key role in enabling Russia’s cyberspying and raising questions of corporate responsibility.

In today’s statement, Nokia said that for humanitarian reasons, Western governments have expressed concerns about the risk of critical telecommunication network infrastructure in Russia failing. It’s not going to leave residents there high and dry, but it will retreat slowly as to not disrupt communications for citizens relying on outside information.

“As we exit we will aim to provide the necessary support to maintain the networks and are applying for the relevant licenses to enable this support in compliance with current sanctions,” the company said.

Nokia has about 2,000 employees in Russia, of which around 200 are working in R&D, according to a company spokesperson.

“Unfortunately in these circumstances redundancies are unavoidable. However, for certain roles that can be done outside of Russia, we will offer relocation. The safety and wellbeing of our employees is our priority and we aim to manage this change in an orderly manner,” the spokesperson said.

As for the financial impact of the decision, Nokia said Russia accounted for less than 2% of its net sales in 2021.

Noting “strong demand” in other regions, Nokia said it doesn’t expect the decision will impact its ability to achieve its 2022 outlook provided in its most recent financial report.

However, it will result in a provision of about $109 million in the first quarter. That compares to the $95 million provision that Ericsson expects to record relative to its moves in Russia. On Monday, Ericsson said it will suspend its affected business with customers in Russia indefinitely.

Who's next? 

Ericsson is a supplier to the largest Russian operators and it has 600 employees in Russia, a company spokesperson told Fierce. It has no manufacturing there; its manufacturing in Europe is located in Poland and Estonia.

While  Nokia and Ericsson make a low single-digit percentage of sales in Russia, Chinese companies such as Huawei and ZTE account for a bigger share.

Reports are circulating that Huawei also may be suspending orders in Russia. Forbes reported that Huawei sent part of its employees from the Russian office on vacation for a month. Citing the Russian newspaper Izvestia, Forbes noted that Huawei accounts for more than 33% of network equipment installed in Russia, including base stations.