[NOK] Nokia Thesis 2026: Network Infrastructure Recovery Tests Mobile Networks Margin

Key Takeaways

• Nokia Corporation (NYSE: NOK) FY2025 revenue €20-22B (-3 to +5% YoY) with adj. EPS €0.35-0.45 reflecting continued post-2024 Network Infrastructure (€8-9B; +5-8%) + Cloud and Network Services (€3-4B; +0-3%) recovery from FY2023-2024 mobile capex downturn plus continued post-October 2024 ~$2.3B Infinera acquisition closing (optical networking) plus selected post-2024 cost reduction program completion under continued CEO Pekka Lundmark (~5-year tenure since August 2020; ex-Fortum CEO 2015-2020 + ex-Nokia VP Mobile 1996-2002 + ~30+-year industry career).
• Network Infrastructure recovery: ~€8-9B FY2025 revenue (+5-8% YoY post-FY2023-2024 mobile capex downturn); fiber + IP routing + optical (post-October 2024 Infinera $2.3B closing) + selected fixed networks + submarine cable; FY2026 catalyst: continued AI data center optical networking demand + ~5-7% revenue growth.
• Mobile Networks margin: ~€8-9B FY2025 revenue (-3 to 0% YoY); selected mobile capex downturn FY2023-2024 stabilization with major US T-Mobile + AT&T + Verizon + Indian + selected various RAN customers; selected post-2024 ~5-7% adj. operating margin (vs ~3-5% FY2023-2024 trough); FY2026 catalyst: continued recovery + ~7-10% adj. operating margin.
• Capital return: €0.14-0.16 annual dividend FY2025 (+0-7% growth post-2024 €0.13 dividend); selected ~€600M aggregate FY2024-2026 buyback program; ~€1.5-1.8B aggregate FY2025 capital return; investment-grade Ba1/BB+ credit rating; selected post-2024 net cash position ~€2-3B.

Company Background

Nokia Corporation (NYSE: NOK) is the global telecommunications network equipment + services provider with FY2025 revenue ~€20-22B (-3 to +5% YoY) and adj. EPS ~€0.35-0.45 reflecting continued post-2024 Network Infrastructure recovery + post-October 2024 ~$2.3B Infinera acquisition closing + selected continued mobile capex downturn FY2023-2024 stabilization. The company employs ~80,000+ globally with operations across telecommunications network equipment + selected enterprise + technology licensing in 130+ countries.

Founded May 1865 as Nokia Ab (originally pulp mill in Tampere Finland) by Fredrik Idestam (~160-year heritage; selected one of Finland's oldest continuing companies); selected post-1967 Nokia Corporation merger of Finnish Cable Works + Finnish Rubber Works + Nokia Ab into single conglomerate; selected post-1980s strategic shift toward telecommunications + electronics; selected post-2007 strategic NSN (Nokia Siemens Networks) joint venture creating telecom equipment leader; selected post-September 2013 ~$7.2B Microsoft Devices and Services acquisition divesting mobile phones business; selected post-April 2016 ~$16.6B Alcatel-Lucent acquisition creating combined Nokia telecom equipment leader; selected post-October 2024 ~$2.3B Infinera acquisition closing (optical networking).

Headquartered in Espoo Finland; ~80,000+ employees globally with ~€20-22B revenue. Four primary business segments: Network Infrastructure 40-45% revenue (€8-9B — fiber + IP routing + optical post-October 2024 Infinera closing + fixed networks + submarine cable), Mobile Networks 40-45% (€8-9B — RAN equipment + 5G + selected various mobile network equipment for major operators globally), Cloud and Network Services 15-18% (€3-4B — cloud-native software + 5G core + service provider software + selected enterprise), Nokia Technologies 5-6% (€1.0-1.2B — patent licensing + selected various technology licensing).

CEO Pekka Lundmark since August 2020 (~5-year tenure); succeeded Rajeev Suri (CEO 2014-August 2020 retired who led Nokia through 2014-2020 NSN integration + 2016 Alcatel-Lucent integration); Lundmark ex-Fortum (Finnish state energy company) CEO 2015-2020 + ex-Konecranes CEO 2005-2015 + ex-Nokia VP Mobile + various Nokia roles 1990-2002 + 30+-year industry career; selected post-2020 Nokia turnaround focus including selected business simplification + selected continued post-2023 cost reduction program (€500-800M aggregate FY2024-2025).

Network Infrastructure Recovery + Infinera Acquisition

Network Infrastructure (~€8-9B; +5-8% FY2025 YoY) recovery post-FY2023-2024 mobile capex downturn:

• Fiber + Fixed Networks: ~€2.5-3B revenue; selected continued post-2024 GPON + XGSPON FTTH expansion globally
• IP Routing: ~€2-2.5B revenue; FP5 family routers + ~7750 SR + selected various IP/MPLS routing
• Optical Networks: ~€2.5-3B revenue post-October 2024 Infinera $2.3B closing (selected combined ~€2.3-2.5B aggregate optical); selected continued AI data center optical networking demand
• Submarine Cable + selected various: ~€1B aggregate

FY2026 catalyst: continued AI data center optical networking demand + ~+5-7% revenue growth + ~€0.05-0.10 incremental EPS contribution.

Mobile Networks Margin Recovery

Mobile Networks (~€8-9B FY2025 revenue) post-FY2023-2024 mobile capex downturn margin recovery:

• 5G RAN customers: T-Mobile US + AT&T + Verizon + Indian operators (Reliance Jio + Bharti Airtel + Vodafone Idea) + Asian + European operators + selected various
• Open RAN: post-2023 OpenRAN initiative + selected various OpenRAN customer wins
• Adj. operating margin: ~5-7% FY2025 (vs ~3-5% FY2023-2024 trough)
• FY2026 outlook: ~7-10% adj. operating margin recovery

FY2026 catalyst: continued recovery + ~7-10% adj. operating margin + ~€0.05-0.08 incremental EPS contribution.

Cloud and Network Services + Nokia Technologies

Cloud and Network Services (€3-4B revenue) + Nokia Technologies (€1.0-1.2B):

• Cloud and Network Services: cloud-native 5G core + service provider software + selected enterprise; ~+0-3% growth FY2025
• Nokia Technologies (patent licensing): ~€1.0-1.2B annual licensing revenue; ~80%+ adj. operating margin; selected continued IPR portfolio licensing including selected post-2024 Apple multi-year licensing renewal

FY2026 catalyst: continued cloud + IPR licensing stability + ~€0.02-0.05 incremental EPS.

Risks

• Mobile capex cycle: continued mobile operator capex compression could compress Mobile Networks recovery
• AI data center hyperscaler: hyperscaler optical networking demand sustainability vs cyclical adjustment
• Geographic exposure: ~30%+ China + emerging market exposure with selected geopolitical risk
• Infinera integration: post-October 2024 ~$2.3B Infinera acquisition integration execution
• Currency: EUR/USD volatility could compress reported revenue + earnings

Key Core Metrics

Market Evaluation

Nokia trades at selected ~13-16x FY2026 P/E discount vs Ericsson (~13-15x) + Cisco (~15-17x) reflecting selected mobile capex downturn FY2023-2024 overhang + selected continued China + emerging market geographic exposure + selected post-October 2024 Infinera integration execution. Selected re-rating catalysts include: (1) continued Network Infrastructure recovery + ~+5-8% growth; (2) Mobile Networks adj. operating margin recovery toward ~7-10%; (3) post-October 2024 Infinera acquisition integration + AI data center optical networking demand; (4) Nokia Technologies IPR licensing stability + selected post-2024 Apple licensing renewal; (5) ~€1.5-1.8B aggregate capital return.

Network Infrastructure Recovery Deep Dive

Nokia Network Infrastructure segment (~€8-9B FY2025 revenue; +5-8% YoY) represents selected primary recovery vehicle from FY2023-2024 mobile capex downturn. Network Infrastructure covers fiber + fixed networks (GPON + XGSPON FTTH) + IP routing (FP5 family + ~7750 SR) + optical networks (post-October 2024 Infinera $2.3B closing creating selected combined ~€2.5-3B optical revenue) + submarine cable + selected various. Selected post-October 2024 Infinera integration represents selected major optical networking expansion adding (a) selected $1.6B Infinera revenue contribution; (b) Cloud Communications Systems Group (CCSG) datacenter interconnect (DCI) optical solutions; (c) Optical Coherent Optics (CCS) advanced optical line systems; (d) selected coherent optical pluggables ZR/ZR+ for AI data center networking. Selected AI data center optical networking demand acceleration ($5-10B aggregate hyperscaler optical networking spend FY2025) supports continued ~+5-7% Network Infrastructure revenue growth + selected adj. operating margin expansion. FY2026 catalyst: continued AI data center optical networking demand + Infinera integration synergies + ~€0.05-0.10 incremental annual EPS contribution.

FY2026 thesis: Network Infrastructure recovery + Mobile Networks margin recovery + Infinera integration + IPR licensing stability + ~€1.5-1.8B capital return.