less than 2% net sales
At the outset of the geopolitical tensions surrounding Ukraine, Nokia determined that maintaining a permanent operation in Russia was not feasible. In recent weeks, the company halted deliveries, suspended new business activities, and began relocating its constrained research and development work outside of Russia. A formal withdrawal from the Russian market was announced as the next step.
During this withdrawal, Nokia prioritized the safety and welfare of its employees. The company also noted that Western governments intend to keep public information and internet access flowing to Russian citizens, viewing this as a way to sustain external opportunities for them.
Consequently, as the exit proceeds, Nokia aims to support essential service networks and pursue the necessary licenses to ensure continued service where possible, while complying with applicable sanctions.
The company stressed that leaving Russia would not have a material impact on its finances, as the Russian market accounted for less than 2% of net sales in 2021. Nokia indicated that the strong demand in other regions should allow it to meet its 2022 forecasts, even if reporting will reflect the changed market exposure rather than a shift in financial performance.
Nokia Corporation manufactures equipment for telecommunications, including mobile, broadband, and IP networks. The firm’s president, Pekka Lundmark, told Reuters that continuing operations in Russia under the current conditions did not seem viable. The company will maintain customer support until the exit is completed.
“In light of recent events”
On the eve of Nokia’s Russian withdrawal, Swedish telecommunications firm Ericsson announced a similar stance.
In late February Ericsson indicated it would suspend all deliveries to customers in Russia. Citing ongoing events and European Union sanctions, the company said it would pause activities with Russian customers indefinitely. Ericsson highlighted that it is working with customers and partners to manage the impact while prioritizing employee safety, with staff in Russia being placed on paid leave according to the company’s communications.
The first quarter of 2022 also included a SEK 0.9 billion impairment charge and other exceptional expenses, not including personnel redundancies.
Ericsson is a Swedish company that provides network technologies, digital services, and maintenance support for telecom networks.
Fifth package of EU sanctions
The European Union’s fifth package, effective from April 8, expanded restrictions on technology transfers to state-controlled Russian telecom operators. Industry observers cited the potential for Rostelecom, Tele2, and Transtelecom to face limitations on importing European equipment and licenses for network infrastructure. Experts noted that even with a push toward domestic substitutes, some European solutions may remain indispensable for critical operations.
Rostelecom is already restricted from seeking funds in the United States, and analysts warned that the ban on European equipment and licenses could affect major operators like Transtelecom and Voentelecom, both linked to large state-backed entities. The Russian market relies on a network of about 100 domestic manufacturers, though these suppliers still depend on imported components that are not yet fully replaceable, according to Telecom Daily’s Denis Kuskov.
The departure of Nokia and Ericsson from the Russian market is viewed as a major shift, given that the two firms together historically accounted for a substantial portion of the country’s telecom infrastructure. Analysts suggested that operators such as Tele2 and Rostelecom could face elevated challenges as their networks often depend on European equipment. Nokia’s role remains significant for operators like MTS, underscoring the broader impact on the market’s modernization and resilience.