Nokia (NOK) shares rose more than 2% in pre-open Tuesday trade after the Finnish telecom infrastructure developer revised its long-term operating margin guidance.
Citing challenges in its mobile networks business exacerbated by AT&T's (NYSE:T) decision to award a $14 billion contract to Ericsson, Nokia lowered its 2026 operating margin forecast from 14% to 13%, acknowledging market conditions and anticipating difficulties in 2024 and 2025.
Nokia aims for a resurgence in 2026 after addressing current challenges. The company anticipates a decline in mobile network sales in 2024, influenced by AT&T's choice and other market factors like spending challenges and the normalization of 5G deployment in India.
“The outlook was expected to be weak, especially after the announcement on O-RAN, however this is still below prior consensus of -1.5% growth and 8.1% operating margin,” analysts at Citigroup said.
Analysts expect Nokia to offer full-year revenue guidance of 23 billion euros and operating margins of 9%. Analysts are looking for 23.3 billion euros in full-year sales and operating margins of 12%.
“Nokia still sees a path to achieving the at least 14% comparable operating margin target but considering the current market conditions in Mobile Networks, this is deemed a prudent change,” the company said in a press release on Tuesday.
On a more positive note, the company said it has started to roll out its commercial open RAN network with Germany’s Deutsche Telekom.
Shares are down 32.8% year-to-date.