Nokia’s network infrastructure had ‘fantastic’ Q1 2021

Nokia’s net sales increased 3% year over year from $5.94 billion to $6.18 billion driven by strong growth in its network infrastructure group, but watered down by decreases in its mobile and cloud business units.

Nokia’s CEO Pekka Lundmark said on the company’s first quarter 2021 earnings call today, “The standout was our network infrastructure business, which had a fantastic quarter.” The unit increased its net sales growth by 22% year over year. “This business group builds on strong technology leadership, and we see robust demand for its products,” said Lundmark.

The network infrastructure business includes fixed, IP, optical and submarine networks. The business unit is led by Federico Guillén.

Increased sales in the fixed segment were driven by fiber access technologies and broadband devices, partially offset by a decline in copper access technologies.

Lundmark said, “Next generation access is a big opportunity for us. Consumers, businesses and governments are all pushing for ultra-fast connections to homes and workplaces, as work-from-home looks like it is here to stay. We expect demand in the addressable network infrastructure to have solid growth of 4% in 2021.”

In addition to work-from-home, Lundmark said the fixed segment will also benefit from 5G. "We should not forget that 5G will start to drive the demand for fixed connections as well," he said. "It is already doing that for base station connections, for backhaul connections. We had some of that already in Q1. But in the little bit longer term, where we get to the phase where operators will start to build high-capacity small cells in mmWave frequencies, that will actually increase the demand for fiber when these small cells will have to be connected back to the network."

Meanwhile, the company’s Mobile unit, which accounts for about half of Nokia’s overall business, saw sales decrease 4% year over year in the first quarter.

And the company also saw a 9% decrease in sales within its Cloud and Network services unit compared to the same quarter last year. This Cloud and Network Services group includes 5G core; analytics and AI; private wireless; digital operations and automation; and managed security. The Cloud and Network Services group is led by Raghav Sahgal.

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Lundmark said the decrease in Cloud and Network Services was primarily driven by a comparison to a particularly strong Q1 in 2020. He is optimistic about the group’s future, saying, “There are early indications of our ability to lead in our chosen focus areas.” The group secured over 80 new service provider deals in the quarter, “reflecting our technology strengths in telecommunications software and private wireless solutions,” said Lundmark. “For instance, Dish is using Nokia’s NetGuard Suite for security, automation and orchestration.”

Nokia’s stock hit a low in March, 2020, at about $2.66 per share. Today it’s up to about $4.64.