Nokia tumbles on lowered outlook as AT&T decides to award $14B contract to Ericsson

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Nokia tumbles on lowered outlook as AT&T decides to award $14B contract to Ericsson
Credit: © Reuters.

Nokia (NOK) said today it expects revenue from AT&T (NYSE: T ) in Mobile Networks to decrease over the next 2-3 years.

The guidance update comes after AT&T (T) decided to drop the Finnish infrastructure provider from its $14 billion contract to build a telecom network that uses only ORAN (open radio access network) technology. Instead, AT&T will award the contract to Nokia’s arch rival Ericsson (ERIXF).

AT&T plans to cover 70% of its wireless traffic in the United States by late 2026 with ORAN technology, which is designed to reduce costs for telecom operators.

ORAN utilizes cloud-based software and equipment from various suppliers, offering a more cost-effective approach compared to proprietary equipment from companies like Nokia, Ericsson, and Huawei. The advantage lies in the interoperability of ORAN components, promoting collaboration among different suppliers.

AT&T accounted for 5-8% of Mobile Networks net sales year-to-date in 2023, Nokia said. Still, the company expects its Mobile Networks segment to remain profitable over the coming years.

AT&T’s decision would delay the timeline of achieving double-digit operating margin by up to 2 years, the company added.

Nokia shares fell 6% in pre-market on the news while Ericsson stock was up 5.2% in Stockholm today.

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