(CTN News) – Nokia, the Finnish telecommunications company, experienced a significant drop in its stock value, reaching its lowest point in three years.
This decline was a result of losing a major contract to deploy a new network in the United States, which was awarded to industry giant AT&T’s Swedish competitor, Ericsson.
As a consequence, Nokia’s shares on the Helsinki stock exchange fell by 7% at 9:40 a.m. London time. In contrast, Ericsson’s shares on the Stockholm stock exchange saw a 7.4% increase.
Late on Monday, AT&T and Ericsson announced their partnership, revealing that AT&T’s investment in the project would amount to approximately $14 billion over five years. Ericsson will be responsible for manufacturing 5G equipment for the network at its factory in Lewisville, Texas.
The collaboration aims to deploy an open radio access network (Open RAN) across the United States, with AT&T planning to utilize this network for 70% of its wireless network traffic by the end of 2026.
The loss of market share as a supplier to AT&T is a significant blow for Nokia, according to the decision. Nokia CEO Pekka Lundmark expressed his disappointment with the news but assured that the company is fully committed to Open RAN and has a strategy in place to diversify its business and improve profitability.
The company is already facing financial challenges, with a decline in third-quarter earnings due to cost-cutting measures by customers.
Nokia expects a decrease in revenue from AT&T in its mobile networks division over the next two to three years, although it believes the division will remain profitable. However, there may be a delay of up to two years in achieving a double-digit operating margin.