Shares in Nokia dropped more than 23 per cent today after it slashed its profit forecast amid hefty investment in 5G.
The Finnish telecoms giant posted net revenue of €5.7bn (£4.9bn) in the third quarter, up four per cent year-on-year, while operating profit rose to €264m.
But the firm warned its profit would be lower than expected this year and in 2020 as it pumps more money into its 5G business.
In addition, Nokia said it will halt dividend payments until its net cash position improves to €2bn.
“Competitive intensity has increased in some accounts as some competitors seek to take share in the early stage of 5G,” the company said in a statement.
Nokia is in direct competition with Ericsson and Huawei to win contracts to provide key infrastructure for 5G networks.
The company now has 48 commercial 5G deals and 15 live networks. However, it is lagging behind its Chinese rival, which has defied a US crackdown to secure 60 contracts.
Nokia’s fortunes also contrast with those of its Swedish rival, as Ericsson last week lifted its full-forecast amid better-than-expected demand for 5G.
“We expect that we will be able to progressively mitigate these issues over the course of next year,” said chief executive Rajeev Suri.
“To do so, we will increase investment in 5G in order to accelerate product roadmaps and product cost reductions, and in the digitalisation of internal processes to improve overall productivity.”
Main image credit: Getty