Nokia's stock fell to a three-year low after the telecom giant missed out on a significant agreement to launch a new network in the United States alongside AT&T, the industry titan.

At 9:40 a.m., Nokia shares listed in Helsinki were down 7%. London time on the announcement that AT&T and its Swedish competitor Ericsson will collaborate on the project. Ericsson will produce 5G equipment for the project at its Lewisville, Texas facility. Ericsson's shares listed in Stockholm saw a 7.4% increase.

(Photo : by JUSSI NUKARI/Lehtikuva/AFP via Getty Images)
Nokia's stock fell to a three-year low after the telecom giant missed out on a significant agreement to launch a new network in the United States alongside AT&T, the industry titan.

With AT&T replacing its current Nokia equipment in many locations and Nokia losing market share as a provider as a result of the move, Nokia suffered a severe blow.

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AT&T's Decision Hits Nokia's Finances

Although the announcement was "disappointing," Nokia CEO Pekka Lundmark insisted that the firm was "fully committed" to Open RAN and that it had plans to diversify its revenue streams. The company's finances are already problematic because of a decline in its third-quarter revenues due to cost-cutting by consumers.

It said on Monday that it anticipated a decline in revenue over the next two to three years from AT&T's mobile networks sector, which has contributed between 5 and 8% of net sales so far this year. Although it noted a two-year delay in its target of attaining a double digit operating margin, it still expects the division to be profitable.

It claimed that the impact of the AT&T decision will be somewhat offset by a previously stated cost-cutting strategy that would eliminate up to 14,000 positions. This plan was revealed in October. Nokia will keep providing AT&T with goods and services in a number of other domains.

The American behemoth also has partnerships with companies like Dell, Intel, and Fujitsu of Japan.

Instead of using proprietary equipment provided by a limited number of large enterprises that do not collaborate, telecom companies are switching to cloud-based software and equipment from several vendors thanks to open RAN or ORAN networks, which save money and energy. Vendors have opposed the idea in part because they fear losing out on commercial prospects.

Nokia's Revenue Expected to Decline in Coming Years

AT&T Network Executive Vice President Chris Sambar stated in a statement on Monday, "With this collaboration, we will open up radio access networks, drive innovation, spur competition, and connect more Americans with 5G and fiber."

Meanwhile, the legal dispute between Oppo and Nokia over Oppo's unauthorized use of Nokia patents and failure to pay a reasonable charge may be coming to an end. The drama is around determining the appropriate price for Nokia's patents, actually. It appears that Oppo does not believe they are reasonable and is unwilling to pay the requested amount. Nokia then took its case to a number of courts, which essentially decided that Oppo must pay Nokia the license costs; however, the figure is still unspecified.

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