Nokia scrapped its revenue forecast for 2019 and 2020 early Thursday, warning that earnings will come under pressure as it spends more to fight off competitors in the highly-stacked 5G network market.
The mobile network equipment maker, which achieved the revenue targets of the third quarter, also said it would suspend dividend payments to increase spending on 5G and only restart them when its cash position increases to around EUR 2 billion.
Market pressure has risen as some rivals are trying to take part in the early 5G phase, it said in a report. Together with Sweden's Ericsson and Huawei, Nokia is supplying the majority of data access network hardware that is essential to 5G mobile services, diminishing its earlier market share growth goal for 2019 and 2020.
5G networks are at the forefront of the ongoing technological battle between the US and China, as they are set to handle critical functions ranging from driverless vehicles to intelligent electric grids to military communications.
Many analysts say that Scandinavian businesses that profit from the challenges faced by Huawei after Washington claimed that Beijing could use its devices for espionage - an allegation refuted by Huawei.
Nokia said that mergers could limit consumer investment in the North American telecommunications industry, but said security concerns might drive new competition.
"In consideration of security concerns, many consumers re-evaluate their suppliers, generating near-term investment stress to ensure long-term benefits," the firm said.
Nokia's statement compares with that of competitor Ericsson who beat quarterly earnings forecasts last week and boosted this year's business outlook and 2020 revenue goal. The Swedish firm said demand for superfast 5G networks is growing faster than expected.
Nokia currently expects earnings per share (EPS) for 2019 at EUR 0.19-0.25 and EPS for 2020 at EUR 0.21-0.35. These have been lowered from prior estimates of EUR 0.24-0.28 and EUR 0.36-0.43.
In the July-September period, Nokia announced a fall in the underlying earnings to €0.05 a share, relative with €0.06 a year ago, but in line with a €0.05 forecast in a Refinitiv survey. Nokia said it now has 48 business 5G deals and 15 live networks.
It posted net sales of EUR 5.7 billion in the third quarter relative with EUR 5.5 billion a year ago and said it expected a fourth-quarter profit of €0.135 per share, below the EPS of €0.14-0.18 expected by Refinitiv, data analysts showed.
This year, Nokia's stocks are down 10.6 percent while analysts are worried that the Finnish business may enter 5G late.
