Ukraine crisis: Nokia pulls out of Russian market

Telecommunications equipment Nokia is pulling out of the Russian market, its CEO told Reuters, a step further than rival Ericsson, who on Monday said it would shut down its business in the country indefinitely.

Hundreds of foreign companies cut ties with Russia after its February 24 invasion of Ukraine and after Western sanctions against Moscow.

While several sectors, including telecommunications, are exempt from some sanctions on humanitarian or related grounds, Nokia said it had decided that leaving Russia was the only option.

“We simply do not see any opportunities to continue in the country under the current circumstances,” CEO Pekka Lundmark said in an interview.

He added that Nokia would continue to support customers during its launch, and it was not possible to say at this stage how long it would take to withdraw.

Nokia is requesting the relevant licenses to support customers in accordance with current sanctions, it said in a statement.

Both Nokia and Ericsson made a low single-digit percentage of sales in Russia, where Chinese companies such as Huawei and ZTE have a larger share.

Nokia does not expect this decision to affect its 2022 outlook, but said it would lead to a provision in the first quarter of around EUR 100 million (approximately Rs. 830 crore).

Russia is also at odds with Finland and Sweden, the home countries of Nokia and Ericsson respectively, over their interest in joining the NATO military alliance.

Russia had also urged companies to start building networks using only Russian equipment, to persuade Nokia and Ericsson to set up factories in the country.

Lundmark said Nokia did not implement a plan announced in November to set up a joint venture with Russia’s YADRO to build 4G and 5G telecom base stations.

Nokia’s decision to leave Russia will affect some 2,000 workers, some of whom may be offered jobs in other parts of the world, Lundmark said.

Nokia has around 90,000 employees worldwide.

“There would have to be a lot of change before it is possible to reconsider doing business in the country,” Lundmark said.

© Thomson Reuters 2022

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