Nokia’s LatAm sales down again in Q2 as regional weakness persists

Nokia’s Latin American sales continue to disappoint, with revenues for the second quarter in the region declining by 6% year-over-year to 216 million euros (US$235mn).

The result shows some improvement, however, compared to the first quarter, when sales tumbled by 25%.

Nokia reported net sales of 388mn euros in Latin America in the first half, down by 16% year-over-year and 13% in constant currency terms, although it registered growth in Europe and the Middle East in the period.

North America, in particular, bounced back to growth in Q2, being the only geography to register sales acceleration, fueled by a massive contract with AT&T.

“We are pleased to see a return to growth in North America, supported by the one-off AT&T benefit. But aside from that, we also saw a return to growth in our network infrastructure business in North America. In other regions, there was softness across most markets,” CFO Marco Wirén told investors in an earnings call.

In Latin America, Europe and Greater China, the IP networks segment decreased, whereas North America, Asia-Pacific and India reported growth. Overall, the segment’s net sales declined 6% on a constant currency basis to 586mn euros.

IP is part of the network infrastructure operation, together with optical networks and fixed networks. All these segments saw drops in Q2. Network infrastructure net sales declined 11% to 1.52 billion euros.

“Fixed networks continues to be well positioned to benefit from strong demand in the fiber market. This is evident in markets where fiber is not yet highly penetrated and in more mature markets where customers are starting to upgrade to XGS-PON or 25G PON,” CEO Pekka Lundmark told the call.

“Elsewhere, government funding projects are expected to start towards the end of this year and Nokia was the first vendor to announce the availability of Buy America compliant products.”

INFINERA

Lundmark also said the Infinera acquisition will significantly increase the scale and profitability of Nokia’s optical networks business, most notably in North America.

The transaction is equally expected to increase the company’s enterprise exposure in network infrastructure, the CEO added, particularly “when considering Infinera's recent webscale design wins in systems and pluggables.”

The combined business is projected to achieve over 600mn euros of annual webscale sales in optical. The transaction is expected to close by the first half of 2025.

ASN

Regarding the company’s ASN submarine networks divestment, Lundmark said that the sale was being envisioned for some time by the company. The deal was closed with the French government.

According to the executive, as part of the original Alcatel-Lucent acquisition deal in 2016 that led to ASN’s creation, France has had a veto right related to strategic decisions, which limited Nokia’s freedom to “maneuver the business.”

“We just now were able to finally find a solution with the French State, that now is a good time for them to acquire the business. It was more tactical that, after quite lengthy discussions, we were able to find each other on the terms and conditions,” he said.