STOCKHOLM Nokia said operating profit fell below market expectations for the first quarter and the Finnish company said it was seeing signs of customer spending slowing down.
It kept its full-year outlook unchanged and said it expects profitability in the second half of the year to be stronger than the first half.
First-quarter comparable operating profit fell to 479 million euros, $524.94 million from 583 million euro last year, missing the 532.4 million euro forecast of analysts polled by Refinitiv.
Telecom providers are building a new 5G network to compete with a slowdown in high-margin markets like the United States.
What we are seeing in India at the moment is the fastest 5G rollout the world has seen, Nokia's CEO Pekka Lundmark said in a statement.
In India, where Reliance Jio and Bharti Airtel account for 15 per cent of its revenue, Nokia now accounts for 15 per cent of its revenue.
Net sales rose 10 per cent in the quarter to 5.86 billion euros, ahead of predictions of 5.72 billion euros.
Lundmark expects a recovery in the North American market in the second half of the year.
Comparable operating margin dropped to 8.2 per cent from 10.9 per cent. The survey predicted a margin of 11.5 per cent to 14 per cent for 2023.
Beyond having big contracts from telecom companies, Nokia is also diversifying its network to industrial customers, who are setting up private 5G networks at power plants to mines.
The weak performance in Nokia's patent licensing business was the main reason for the earnings drop, according to Danske Bank Credit Research analyst Mads Lindegaard Rosendal.
Lundmark attributed it to legal battles with Vivo and Oppo.