(Bloomberg) — Finnish 5G gear maker Nokia Oyj plans to exit the Russian market in response to the invasion of Ukraine and the full-scale war Russia is waging.
Over the last weeks Nokia had suspended deliveries and stopped new business, it said in a statement on Tuesday. It’s also moving its “limited” research and development activities out of Russia. The decision follows Swedish rival Ericsson AB’s announcement on Monday of an “indefinite” suspension of business there.
“It has been clear for Nokia since the early days of the invasion of Ukraine that continuing our presence in Russia would not be possible,” Chief Executive Officer Pekka Lundmark said on Twitter.
Nokia has 2,000 employees in the country, and “redundancies are unavoidable” though the company will offer relocation “for certain roles that can be done outside of Russia,” a spokesperson said in an emailed response to questions.
By pulling out, Nokia and Ericsson are ceding the market to Chinese rivals Huawei Technologies Co Ltd. and ZTE Corp, which have already won big contracts to supply fifth generation networks to Russia’s biggest carriers. Huawei’s failure to condemn President Vladimir Putin’s invasion of Ukraine has caused controversy as it seeks to continue business in other markets. British board members resigned last month following its silence on the matter.
Nokia said that it still aims to provide support for networks maintenance for operators including MTS, Vimpelcom, Megafon and Tele2 while it winds down operations in Russia, and apply for the relevant licenses to enable that support “in compliance with current sanctions.”
Ensuring “continued flow of information and access to the Internet, which provides outside perspectives to the Russian people,” is “the most responsible course of action” to take, the Finnish telecommunication equipment maker said.
Nokia expects to book a provision of about 100 million euros ($109 million) in the first quarter. Given “strong demand” in other regions and Russia accounting for less than 2% of net sales last year, Nokia said the decision would not have an impact on its ability to reach its 2022 outlook.
(Adds impact on rival Huawei, ZTE in fifth paragraph)
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