The CEO of Nokia Oyj (NYSE: NOK), Pekka Lundmark, has announced that the company will pull out of Russia. The company is not the first to move out of Russia since it invaded Ukraine on February 24. For example, Ericsson, a rival to Nokia, has stated that it would suspend its operations in the country.
Nokia was exempted from sanctions
The West has imposed several sanctions on Russia after it attacked Ukraine. However, these sanctions don’t apply to pharmaceutical companies since Russians still require medication. They also don’t apply to telecoms like Nokia. Despite the exemption, the company has stated that it feels there is no other alternative.
Lundmark has explained that Nokia can’t do any business with Russia under these conditions. However, the company would support customers as it exited the market. Nokia hasn’t revealed how long its withdrawal from the Russian market would take. Meanwhile, the company will apply for the appropriate licenses that would allow it to support its customers as it tries to comply with sanctions.
Nokia has stated that the impact of this decision on its 2022 outlook would be minimal. Ericsson and Nokia don’t make significant sales in Russia. Huawei and other Chinese companies have a larger market share in the country.
The move might have been encouraged by Russia’s tension with Sweden and Finland. The two countries are headquarters for Ericsson and Nokia, respectively. However, the two countries have shown an interest in joining NATO since the war began, and Russia isn’t happy with this.
Nokia has halted its partnership with YADRO
Russia is also trying to convince the two companies to build manufacturing facilities in the country by pushing them to only use materials from the country. In November 2021, Nokia announced a collaboration with YADRO, a Russian company, to build 5G and 4G telecom-based stations. The company will not go forward with the partnership.
Lundmark has stated that the company’s decision will impact 2000 employees. Fortunately, these people could have employment opportunities in other countries. The CEO has stated that Russia would have to make several changes before Nokia comes back to the country.
Experts now wonder if Chinese companies like Huawei could soon follow in Nokia’s footsteps after the company suspended a few orders.
