AI & ML Engineer G RAN & GPU-Driven Software

Nokia CEO Justin Hotard is collapsing four business groups into two and slashing costs in a bid to revive the company.

Nokia's Justin Hotard (left) addresses visitors at the official opening of the company's new Oulu campus in September. (Source: Nokia)

The 13-note Nokia ringtone, snatched from an obscure classical guitar piece by nineteenth-century Spanish composer Francisco Tárrega, is rarely heard in 2025. Smothered years ago by Apple's dreadful iPhone marimba, which sounds like a child bashing a toy xylophone, it was briefly resurrected in front of a New York audience this week by Justin Hotard, Nokia's CEO, as a reminder of the Finnish company's heyday during the mobile-phone boom of the late 1990s.

But it was also a reminder that mobile continues to be Hotard's number-one problem.

He was a humble engineer working on 2G mobile networks when that ringtone was first heard, Hotard told investors and analysts at Nokia's capital markets (CMD) day. Almost 30 years later, he is Nokia's first American CEO and at times has sounded like the most ambitious leader the company has had since its ignominious retreat from the handsets market. Nokia is unlikely ever to recapture the brand recognition it previously enjoyed among ordinary consumers.

But in what Hotard likes to call the "AI supercycle," it could – as one of the world's biggest developers of network infrastructure – play the same kind of role that Cisco had during the Internet boom.

Its financial performance, however, has remained a disappointment, chiefly due to the weakness of the mobile networks business group that acquired its present shape under Pekka Lundmark, Nokia's previous CEO. "This is a place where we've had challenges," said Hotard on stage in New York. "It is first of all very clear that this is a business that has not delivered acceptable returns.

It is ours. We own it. We know we need to fix it."

Fixing it starts with a major restructuring across the whole of Nokia that shrinks the number of business groups from the four it had under Lundmark to just two. One of them, network infrastructure (NI), already existed and is essentially unaffected by this week's move. It houses the fixed, Internet Protocol and optical units and was fattened earlier this year by Nokia's acquisition of Infinera, a US optical networks specialist whose CEO, David Heard, replaced Federico Guillén as the NI president in June.

But the changes made this week are all about the other three parts, merging them into one supergroup that Nokia calls mobile infrastructure (or MI). Hotard will run it on an interim basis until a full-time president is found. Tommi Uitto, the former president of mobile networks, is to leave Nokia's group leadership team on December 31.

From a sales perspective, the biggest component of MI is what Nokia currently refers to as the radio unit, which formed the bulk of the now-deceased mobile networks business group. In the last year, it has generated about €7.5 billion (US $8.7 billion) of Nokia's sales, approximately 40% of company revenues in 2024. Added to that, with annual revenues of about €2.5 billion ($2.9 billion), are Nokia's core network assets, formerly part of cloud and network services.

But most of the profits will come from the third "standards" unit, or what was originally known as Nokia Technologies. A licensor of the company's intellectual property, it made an operating profit of €1.1 billion ($1.3 billion) on revenues of €1.4 billion ($1.6 billion) in the last year.

The effect of the rejig will be to create a group with beefier margins, compared with the earlier mobile networks business. It would theoretically allow Nokia to fund radio activities with licensing profits, although this would obviously hurt those margins. The restructuring will also obscure the performance and profitability of the radio part. So far this year, mobile networks has not looked pretty, with an operating loss of €64 million ($74 million) on sales of €5.3 billion ($6.1 billion) for the first nine months.

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