Nokia Restructures Operations Into Dual Segment Model While Lifting Profitability Ambitions Through 2028

2025-12-26 03:07:32

Abstract generation in progress

Nokia (NOK) has unveiled an ambitious operational restructuring coupled with elevated financial objectives, signaling a strategic pivot to enhance efficiency and market competitiveness. The telecom equipment maker plans to reshape its organizational architecture into two distinct operating divisions starting January 1, 2026, fundamentally changing how it manages its sprawling product portfolios.

The newly configured Network Infrastructure division, continuing under David Heard’s leadership, will consolidate three core business units: Optical Networks, IP Networks, and Fixed Networks. Complementing this is the Mobile Infrastructure segment, temporarily helmed by Justin Hotard, which brings together the Core Networks portfolio, Radio Networks operations, and Technology Standards (formerly Nokia Technologies) into a unified structure comprising Core Software, Radio Networks, and Technology Standards business units.

On the financial front, Nokia has set its sights on comparable operating profit reaching €2.7 billion to €3.2 billion by 2028, representing a substantial climb from the €2.0 billion achieved over the past 12 months. This replaces the company’s previous profitability metrics, which emphasized maintaining at least a 13% operating margin and converting 55-85% of comparable operating profit into free cash flow. The new guidance targets net sales growth of 6-8% annually between 2025 and 2028, with the combined Optical Networks and IP Networks expected to expand at a more accelerated 10-12% rate annually.

The reorganization becomes effective from the first quarter of 2026, when Nokia will begin reporting financial performance under the redesigned segment framework. This structural transformation appears designed to streamline decision-making, improve accountability across distinct market verticals, and better position Nokia to capitalize on emerging infrastructure demands in both fixed and mobile telecommunications sectors.

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