Nokia Restructures for AI, Sets New Profit Goal
Nokia restructures for AI, splitting into two units and targeting up to a 60% rise in comparable operating profit by 2028; traders will watch margins.
KEY TAKEAWAYS
- Nokia will report as two units, Network Infrastructure and Mobile Infrastructure, effective Jan. 1, 2026.
- Company set a group comparable operating profit target to rise by up to 60% by 2028.
- Network Infrastructure targets 6-8% net-sales CAGR and mid-teens operating margin.
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Nokia announced on Nov. 19, 2025, that it will split into Network Infrastructure and Mobile Infrastructure units effective Jan. 1, 2026, aiming to accelerate AI and cloud growth and increase comparable operating profit by up to 60%.
Restructuring and Financial Targets
The company said in a press release and at its Capital Markets Day that it will reorganize into two operating segments to sharpen focus on AI and cloud technologies amid slowing traditional 5G demand. It will introduce new strategic key performance indicators (KPIs), adjust parts of its group leadership team, and review several non-core businesses. Justin Hotard, president and CEO, said, "Nokia changed the world once by connecting people — and will again by connecting intelligence." The plan aims to unlock sustainable returns by emphasizing differentiated technology.
Nokia set a new group comparable operating profit target for the plan period, linking the goal to its strategic pivot toward AI and cloud.
Operating Segments and Guidance
Network Infrastructure will combine Optical Networks, IP Networks, and Fixed Networks under David Heard’s leadership. This unit will focus on AI, cloud, and data-center build-out, targeting a net-sales compound annual growth rate (CAGR) of 6–8% through 2028. Optical and IP Networks aim for a 10–12% CAGR with an operating margin between 13% and 17%.
Mobile Infrastructure will group Core Software, Radio Networks, and Technology Standards, led on an interim basis by Hotard. It will pursue AI-native networks and early 6G development, targeting a gross margin of 48–50% by 2028, with operating profit growing from a EUR 1.5 billion base.
The company identified four "Portfolio Businesses" for review: Fixed Wireless Access CPE, Site Implementation and Outside Plant, Enterprise Campus Edge, and Microwave Radio. These units generated EUR 0.9 billion in net sales and a EUR 0.1 billion operating loss over the past 12 months. Nokia plans to decide their future direction in 2026, prioritizing continuity for customers and employees during the transition.
Nokia Defense was launched as an incubation unit to develop defense-grade solutions, building on Nokia Federal Solutions in the U.S.
The company said it will maintain capital discipline, continuing its active share-buyback program while focusing investment on differentiated areas and co-innovation with customers and partners. It aims to reduce Group Common and Other operating expenses to EUR 150 million by 2028, down from EUR 350 million today.
No new regulatory approvals or government actions were disclosed in connection with the reorganization. The portfolio reviews scheduled for 2026 will be a key milestone for how the two-unit structure pursues its profit and margin targets.
