Nokia Sees Network Market Down in 2017, Modest Growth in 2018

Nokia expects its sales to fall around 2 percent next year, in line with the broader telecom network businesses in which it operates, but forecasts the market and its own business will return to modest growth in 2018.

The Finnish company set out its outlook on Tuesday at an investor meeting in Barcelona, where it warned markets for networks equipment next year would decline in Europe, Greater China and Latin America, while remaining flat in North America, Middle East Africa and Asia, outside China.

Nokia added it planned a dividend of 0.17 euros per share for 2016, up from 0.16 euros last year, but below analysts' mean forecast of 0.19 euros, according to Thomson Reuters data. Nokia also paid a special dividend of 0.10 euros in 2015.

Shares in the company fell 5.6 percent following the announcement.

Between 2016 and 2021, Nokia said it expected a rebound in several regions of the world, although growth would remain flat in Europe and decline over the next five years in Greater China, according to its investor presentation.

Nokia bought French rival Alcatel-Lucent earlier this year to better compete with Ericsson and Huawei in a tough market.

Ericsson, the world's largest mobile equipment maker, in particular has had a torrid few months, issuing a series of profit warnings.

Last week, the Swedish firm said its mobile gear business would decline around 2 to 6 percent in 2017.

Ericsson has suffered a sharper fall in sales, cut its forecasts and recently hired a new chief executive amid an industry-wide decline in demand for current 4G mobile network equipment, which is not expected to significantly recover until next-generation 5G equipment arrives around 2020.

Nokia President and Chief Executive Rajeev Suri said on Tuesday his company was outperforming Ericsson in almost every area.

"Nokia is not Ericsson. They are in crisis," Suri told investors.

Nokia said that while its network sales were set to decline next year, it expected the operating margin for the business to improve on the back of cuts of 8-10 percent to the cost base, compared with estimated cuts of 7-9 percent in 2016.

© Thomson Reuters 2016