Shock Nokia officially stopped doing business in Russia

Currently, hundreds of foreign companies are severing ties with Russia following the February 24 invasion of Ukraine and following Western sanctions on Moscow. While some sectors including telecommunications have been exempted from some sanctions for humanitarian or other related reasons, Nokia said it has decided that leaving Russia is an option. only.

The company’s CEO told Reuters that telecommunications equipment maker Nokia is pulling out of the Russian market, taking it a step further than rival Ericsson, which recently decided to only suspend business in the country indefinitely. .

CEO Pekka Lundmark said in an interview: “It has been clear to us that since Russia started its invasion of Ukraine, we have found that we will not be able to maintain a long-term presence in Ukraine. Russia. Sanctions are getting tighter and tighter, which can make operations more and more difficult; we also don’t see any possibility to continue operating in Russia under the current circumstances.” . Nokia will continue to support customers during the shutdown, he added, and could not say how long this withdrawal will take.

As can be seen, the group is the latest of a number of companies that have made decisive moves to exit a country that is becoming increasingly toxic to do business. However, telecommunications companies are in a particularly difficult situation, as their hasty withdrawal could deprive Russian civilians of the ability to communicate and receive information from the rest of the world. .

The Finnish supplier plans to completely withdraw from the Russian market, meaning that all 2000 jobs there will eventually disappear or be relocated outside Russia. However, this will not happen quickly. In its statement, the Finnish supplier said it had applied for a license to continue supporting Russian networks so that modern communication systems do not disappear for ordinary Russians overnight. while implementing a gradual withdrawal while still subject to sanctions.

The company said this was “for humanitarian reasons” and because of “the importance of ensuring a constant flow of information and access to the internet, which provides outside perspectives to the Russian people.” “. At the same time, Nokia wants to make sure this pullout will not cause hardship for affected employees. “This is the most responsible action Nokia has taken as we withdraw from the Russian market,” the company said in a statement.

“Clearly to Nokia, since the early days of the invasion of Ukraine, this shows that continuing our presence in Russia will not be viable. Over the past weeks we have suspended deliveries. products, closing new business and moving limited Research and Development (R&D) activities out of Russia.We can now announce that we will exit the Russian market.During this process, Our priority continues to be the safety and well-being of our employees,” Nokia said in a press release.

In fact, Nokia’s Russia operations account for less than 2% of the company’s revenue. The exact time Nokia will stop working in the country is completely unknown. According to market research firm Dell’Oro, both European companies Nokia and Ericsson account for about 20 to 30 percent of the radio network equipment market in Russia, respectively, with Chinese conglomerates Huawei and ZTE accounting for the lion’s share. rest. These four companies dominate the international market for networking equipment. Nokia doesn’t expect the decision to affect its 2022 outlook, but says it will have to provide a provision of around 100 million euros ($109 million).

Meanwhile, Russia has also been harsh with Finland and Sweden, the home countries of Nokia and Ericsson, over their interest in the two countries joining the NATO military alliance. As a result, Russia has also pushed companies to start building networks using only Russian equipment, trying to convince Nokia and Ericsson to set up factories in the country.

Nokia will also not implement a plan announced last November to form a joint venture with Russia’s YADRO to build 4G and 5G telecommunications base stations, Lundmark said.

Nokia’s decision to leave Russia will affect around 2,000 employees, and some of them may be offered jobs in other parts of the world, Lundmark said. Currently, Nokia has about 90,000 employees globally.

When asked if Nokia would consider returning to Russia if the humanitarian crisis subsides and the sanctions end, Lundmark said “it’s impossible to speculate . . . changed a lot to return to Russia”.

Nokia isn’t the only major mobile carrier to pull out Russia in the long term. Recently, rival supplier Ericsson announced that it would suspend business indefinitely in Russia, putting about 600 of the company’s employees in the country on paid leave. Whether this figure will lead to a full withdrawal from the Russian market remains unclear.