In the same period last year it posted net profit of €347m before it acquired rival hardware supplier Alcatel-Lucent SA.
This is Nokia's second quarterly loss in a row, and it has vowed it will now step up cost cutting, now targeting €1.2bn in annual cost savings by 2018, up from €900m.
Nokia's revenue climbed sharply from the Alcatel deal to €5.68bn, from €2.92bn in the same period last year.
However, the two individual companies last year posted combined revenue of €6.36bn for the period, down 11 per cent this year.
Revenue fell short of the average analyst estimate of €5.87bn, while net profit was in line with expectations.
Rajeev Suri, Nokia president and chief executive, said:
The decline of our topline remains a concern, and reflects challenging market conditions. While we do not expect those conditions to improve in the near term, we believe we are well-positioned given the scope of our portfolio, focus on operational discipline, strengthening sales execution, and opportunities in the evolution from 4G towards 5G.
Last year Nokia bought French telecoms giant Alcatel-Lucent for €15.6bn, a huge change in direction for Nokia, which sold its mobile manufacturing arm to Microsoft in 2013 (which Microsoft has now sold on). The company is increasingly positioning itself as one of the world's largest providers of mobile technology.
Savings from the merger are expected to reach €1.2bn in 2018, better than the €900m that was projected in May, with thousands of job cuts on the cards.
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Nokia took a €600m blow from restructuring and associated charges in the second quarter.
“The merger execution is progressing, but the tough market situation is really weighing on earnings,” Mikael Rautanen, an analyst at Inderes, said in a note to clients. “There is no clear visibility into when earnings will improve.”