Nokia has announced that it was taking its business entirely out of the Russian market due to humanitarian reasons regarding Russia’s ongoing, unprovoked attack in Ukraine. Competitor, Ericsson, announced it’s closing down business indefinitely a day before Nokia’s announcement. Nokia CEO Pekka Lundmark told Reuters, “We just simply do not see any possibilities to continue in the country under the current circumstances.”
This news comes shortly after Nokia halted all deliveries and new business and moved its R&D activities out of Russia. Nokia stated, “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,” the statement continued, “We can now announce we will exit the Russian market.”
The most recent statement above comes after a New York Times article detailing Nokia’s hand in enabling Russia’s cyberspying, which raised questions about corporate responsibility. Nokia released a lengthy response to the article distancing itself from the claim calling the report “misleading.”
In today’s statement, Nokia said that it would not leave residents high and dry and dissolve its business slowly so as not to disrupt any vital communication methods Russian citizens are relying on for important, outside information. Nokia noted that a cautious shutdown is in part due to Western governments’ concerns about the risk of making waves in Russia’s telecommunications network leading to failure.
Nokia said, “As we exit, we will aim to provide the necessary support to maintain the networks and apply for the relevant licenses to enable this support to comply with current sanctions.”
Nokia has 2,000 employees in Russia, and of those, 200 work in R&D. The spokesperson said, “Unfortunately, in these circumstances, redundancies are unavoidable. However, for certain roles that can be done outside of Russia, we will offer relocation. The safety and wellbeing of our employees is our priority, and we aim to manage this change in an orderly manner.”
Nokia doesn’t anticipate the removal of business from the Russian markets as detrimental to the company because Russia accounted for less than 2% of its net sales in 2021. Because there’s “strong demand” elsewhere, Nokia is optimistic about its 2022 outlook and doesn’t see this as a hindrance. The move, however, will result in a provision of around $109 million in the first quarter, which is $14 million more than what Ericsson is expecting due to its action on Russia.
Ericsson has no manufacturing in Russia, primarily in Poland and Estonia. The operator, however, is the largest supplier to Russian operators, with about 600 employees in the country. Nokia and Ericsson don’t have a chokehold on business in Russia, with Chinese companies Huawei and ZTE with much bigger shares. However, reports are circulating that Huawei may also be suspending orders in Russia after Forbes reported that Huawei sent some of its employees located in Russia on a month-long vacation. According to the Russian newspaper Izvestia, Huawei accounts for more than 33% of the network equipment installed in Russia, including base stations.