Nokia to leave Russian market; Ericsson suspends operations there

Nokia and Ericsson have announced plans to halt their operations in Russia in light of that country’s invasion of Ukraine. Ericsson said yesterday it will suspend its operations in Russia “indefinitely,” while Nokia said today it will exit the market. Both companies’ involvement in Russia focused primarily on wireless network technology, and neither expects their decisions to have significant effects on their businesses.

Nokia asserted that its decision to pull out of Russia follows moves “over the last weeks” that have included a suspension of deliveries, cessation of new business, and moving what it termed “our limited R&D activities” out of the country. However, the company plans to find a way to help its customers in Russia continue to keep their networks running once Nokia leaves.

“For humanitarian reasons, Western governments have expressed concerns about the risk of critical telecommunication network infrastructure in Russia failing. They have also emphasized the importance of ensuring the continued flow of information and access to the internet which provides outside perspectives to the Russian people,” Nokia said in a statement. “Therefore, as we exit we will aim to provide the necessary support to maintain the networks and are applying for the relevant licenses to enable this support in compliance with current sanctions.”

The company says that Russia accounted for less than 2% of its net sales in 2021. Given its expectations for increased demand for its products elsewhere in the world, Nokia expects shutting down operations in Russia will not prevent the company from achieving its financial goals for 2022. Nokia predicted a first quarter provision of approximately €100 million ($108.6 million) for its action, which will affect its reported but not comparable financial performance.

An early start

Ericsson, meanwhile, says it had begun curtailing its Russian operations in February, when it suspended all deliveries to customers there. “The company will now suspend its affected business with customers in Russia indefinitely,” according to a statement Ericsson issued yesterday. The company stated it is negotiating with partners and customers on how the suspension will proceed. Meanwhile, Ericsson employees in Russia will be placed on paid leave.

The company will record a SEK 0.9 billion ($94.9 million) provision in first quarter 2022 for impairment of assets and other exceptional costs related to the move. “No staff redundancy cost is included,” the company said. Approximately a third of the provision will affect cashflow, Ericsson added.

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