Nokia MWC 2025 Press and Analyst Event

Good afternoon and welcome to Nokia's press and analyst event. The event is starting, please take your seats. Please welcome Nokia's president and chief executive officer Pekka Lundmark.

Hey, thank you and warmly welcome to Nokia's press and analyst event at Mobile World Congress. We have a full house and great presence this year. We've spread our investment more broadly, present at 20 other booths with partners. This business is about partnerships. We have great demonstrations showing technology leadership, especially how these technologies help service providers do better business. Let's start with context. Everybody's talking about AI and cloud, but trusted connectivity underpins all of that. Service providers need to be in good shape to tap new revenue streams, manage network complexity, and cut TCO. We are demonstrating ways to help through cloudification, automation, interoperability, and monetization. On cloudification, many parts of the network can move to cloud. We have exciting announcements, like with Bell Canada using our AirScale portfolio with Red Hat and D Technologies. The core network is key; we have over 120 5G standalone core deals, but only about 60 deployed. It's accelerating with recent deals with AT&T, Ooredoo, Telica Spain. On automation, an STL study shows an average operator can benefit $800 million per year in savings and revenues through automation. We have new AI-powered products to maximize performance, simplify operations, and minimize opex. We announced new agentic AI capabilities across our autonomous networks portfolio. For example, our digital operations center uses generative AI to cut network slice creation from days to minutes. On interoperability, we are the only vendor with proven interoperability across all layers of the RAN. Recent deal with Deutsche Telekom for over 3,000 sites for multivendor O-RAN. On monetization, we have our Network as Code platform with over 50 customers, including BT, Orange, Telica. We announced a new API deal with Deutsche Telekom for SIM card swap and number verification for banks. As a bonus, Nokia Bell Labs turns 100 this year. The transistor was invented there. Now laying grounds for AI-native, quantum-ready networks, and 6G. Moving to strategic opportunities outside service providers: Data centers – we announced stepping up investment, aiming at $1 billion incremental net sales by 2028. Giga ranked us number one in all categories in data center switching. Momentum with Microsoft, Nscale, partnerships with Kril and Lenovo. Infinera deal closed two days ago – David Heard is here. Defense – we acquired Phoenix Communications, launched Nokia 5G Banshee Flex radio. Announcing a new partnership with Lockheed Martin. Let's hear from our partner.

Hi, I'm John Clark, senior vice president for technology and strategic innovation at Lockheed Martin. I'm excited to share our new strategic relationship and collaboration with Nokia, along with our longtime 5G DoD Unified Network Solutions partner Verizon. Last year, Lockheed Martin and Nokia began working together to integrate Nokia's industry-leading military-grade 5G network solutions into our 5G.MIL hybrid base station products. Leveraging industry open standards and working closely with Verizon, we have successfully demonstrated interoperability and seamless information flow between military tactical communication systems and commercial 5G devices connected to Nokia's 5G solutions in a hybrid network operating environment. This milestone marks a significant step forward in harnessing the combined innovations of Nokia, Verizon, and Lockheed Martin to deliver faster performance, higher reliability, and improved scalability to our defense and national security customers across the globe. My sincere thanks to the Nokia and Verizon teams for their collaboration, and I look forward to a bright future working together to solve our customers' toughest challenges.

Great partnership with Lockheed Martin. Defense is going to be a lot about partnerships. The third growth area is private wireless and industrial edge. We have approximately 850 private wireless customers, including Rio Tinto, Nippon Steel, Lansa. We have cases where ROI to the customer is 100% within two years. Now before I finish, quick comments on the outlook of our four business groups. Network infrastructure: 177% growth in Q4, strong growth expected this year, and Infinera will boost capabilities. Mobile networks: good momentum, won 14 new service provider customers in 2024, plus increased share with 10. Since beginning of 2024, 18,000 new base station sites net, now over 30,000. We are taking market share. AT&T volumes are going down but we are compensating. Cloud and Network Services: momentum in core and private wireless, acquired Rapid, expect growth. Nokia Technologies: completed smartphone renewal cycle with Apple and Samsung, progress in automotive, consumer electronics, IoT, video streaming. Signed first two deals with Chinese automotive makers. Filed record number of patents in 2024, over 7,000 patent families essential to 5G. Expect approximately 1.1 billion operating profit in 2025. That's everything I wanted to cover. We remain 100% focused on execution and technology leadership. I announced my retirement a few weeks ago. I've been a listed company CEO for 23 years, 92 quarters. I love Nokia, our customers, employees, technology. The achievement I'm proudest of is regaining technology leadership. We had a tough market in 2023 and first half of 2024, but markets are coming back. We had 9% growth in Q4 and highest profitability in 10 years at 19.1% comparable operating margin. Justin Hotard is a great choice for next CEO. I'll work with him on a smooth transition. Now the next one up will be Federico.

Thanks, Federico. Happy to be here. As Federico said, AI brings challenges to networks. It starts with scale. We've been talking about the data tsunami for over a decade, but we ain't seen nothing yet. Power requirements are getting very interesting. In Dubai, we realized the power required by data centers is more than it takes to run the city. We've reached the limit of what we can cram onto a single fiber. There is a need for innovation to expand networks affordably. The new shape of the optical networking business will put us in much better shape. Our shared history is rooted in technology innovation. The PSC-6S is a huge milestone, scaling up to 1.2 terabits per second per wavelength with reach over 2,500 km, 800 Gbps, taking significant amounts out of network power consumption. On the Infinera side, similar history: first large-scale photonic integrated circuit in 2004, Nyquist subcarriers, multivendor interoperable PCS. Together we will have much stronger solutions. On the DSP and optical front end, we will be able to deliver multiple generations and applications at the same time, backed by fundamental research from Bell Labs, with greater technology depth, adding Indium Phosphide capabilities to our strength in silicon photonics, and vertical integration with fab and advanced packaging. It's an amazing time to be in optical networks at Nokia.

I guess I get a quota. 40 hours into the job, so thank you very much. It's great to be here. It has been about 40 hours on the job, but I did join Bell Labs back in 1990, so it's good to be back home. The timing of this deal couldn't be any better. Typically when you announce a deal, customers get confused. But since the deal was announced in June, both businesses have gained momentum. Network infrastructure grew 19% in revenue in Q4, book to bill above 1. Infinera grew 177% year-over-year in revenue, book to bill 1.3. The big piece is the design wins going forward. The scale of these had to happen for customers to get lowest power per bit, lowest cost per bit, and greatest agility. You need to go all the way down into the chipset, whether in access, routing, or optical. Those three technologies are coming together at angstrom scale inside a chipset. All these areas are huge growth opportunities for Nokia. Our team is jacked up. We are very stoked to put the R&D of both companies together. Our R&D plan addresses really big markets: tens of thousands of links under the sea, hundreds of thousands in long-distance networks, millions of connections between data centers. Data centers are being erected in power grids; we're running out of power, so we have to build new data centers. Inside the data center, we are using optics and photonic integrated circuits to move very short distances between GPUs. That opens up hundreds of millions of connections inside data centers that we are prepared to service. That goes all the way out to broadband access. Fiber is everywhere. We are in a unique position from chip, systems, and software perspective. The partnership and grip from customers I've never seen before. We are loaded for bear. Big start for the year. The next five years we will see a super cycle of investment in network infrastructure. I couldn't be more excited to partner with Federico on that.

Thanks Federico. Hello to everyone. It's really good when your CEO can tell you a story, so I'll just make brief comments. Pekka talked about momentum in four key areas. First, core and cloudification of core. We have over 123 networks in 5G SA, over 50% of deployed 5G SA networks. Recent announcements with AT&T, Ooredoo, Telica Spain. It's not just about core but automation above the core. Autonomous networks are accelerating. This allows us to manage complex networks and expose the network to the larger ecosystem. We are adding AI, agentic AI, observability to harness the whole network. On monetization, with the acquisition of Rapid, we have over 55 customers and partners. We need to connect the APIs of the network into the ecosystem. Finally, private networks – our Edge strategy. Industrial base of mines, ports, manufacturing are digitalizing. They look for worker safety, ESG benefits, productivity gains. We have over 850 networks, over 50% market share, growing at double digits. One of the advantages I have is talking to customers. What's on their minds? Improving customer experience is key to monetize. Underneath that, revenue growth, and taking cost out through automation. Operator customers are also interested in enterprise business through private networks and hybrid networks using slicing. It's about cloud, automation, monetization, and enterprises. We have established partnerships with leading companies. I'd like to tell our story through one of our leading customers. I'd like to invite Ulf, president in technology at T-Mobile USA, to come join me on stage for a fireside chat. Welcome, Ulf.

Thanks, thanks, thank you. Wow. Magenta, please go. All right, thank you so much, thanks for having me. Great to be here. Thanks all for joining us. Much appreciate the time. You know, if I started to talk about innovations at T-Mobile, I'd probably consume the whole 15 minutes. So I'll just talk about you do a lot, you clearly do. But clearly, in terms of the innovations that you've been driving, you clearly have a first to launch 5G SA, and you're probably the largest SA network in the world. You're also one of the highest market cap in the industry. That's a clear statement of leadership. You've led in VoNR, carrier aggregation, T-Life, T-Priority. All of these innovations that are coming on.

But let's try and unpack some of this innovation. What's causing the technology underneath that is causing all of this success? The first thing I want to talk about is cloud. This is something you're adopting quite aggressively in your environment. Could you tell us your strategy, how you're consuming and adopting it, and where you are in this journey?

All right, well thanks Raghav. And yes, innovation is really part of what we do at a very large scale. We have one word in T-Mobile: dream big and deliver. That's an internal mantra. Number one thing is always for the customer. We have been able to process through a number of these innovations and make them a reality. The standalone network – we were 2020, we had standalone like nobody else. Our idea was to invest, make bold investments, and attract customers. We used 5G to leapfrog competition in the US, which has been very successful. We continue on that journey. We realized we need to be faster at deploying software into our network, get services much faster. Last year was amazing – we did a lot of network slicing. That's when we can create a monetizable customer experience through the entire network. It's complicated because we need to program the radio access, core, transport, everything in between, and do it instantaneously. For example, big sports events: PGA golf, Major League Baseball, Formula 1 Las Vegas Grand Prix, where we used network slicing to guarantee traffic for push-to-talk applications. We bring this into our enterprise business at large scale – hospitals, retail, airports. It's growing very fast. So we need to be much faster, hence the programmable network. We're moving everything we can to a cloud-native infrastructure. Our partnership with Nokia is absolutely essential. You're providing us with the orchestration engine and many other parts. Our cloud story now becomes the autonomous network story. What's different is that we do it at large scale. We're building out cloud-native workloads across the network, including our AI RAN story – doing even the RAN cloud-native eventually.

Well, thank you. You know, clearly there's a lot of innovation going on there. If you look at the automation world, operators are at various stages of automation. This is around orchestration, slicing, all of these things. How did you take this journey? What were the key success factors? Where do you think you are and what more do you have to get done here?

Well, um, the young carrier T-Mobile – we always think about automation also in the lens of customer. We are creating customer journeys that are as automated as possible. We announced our partnership with OpenAI during our Capital Markets Day last year, which is part of taking customer journeys and making them exceptionally good. On the network piece, it's the same – we're doing it to create a better customer experience. That means automation of instantiations of slices, creating slices when we need to, and all the other parts of the network that can create higher resiliency and better customer experience. For example, we had big hurricanes like Milton and Helene last year. By using automation in our radio access, we were able to recover customers much faster – we cut the time to recover customers in half by tuning and tilting antennas so that if a site fell out due to power loss, we could tilt and cover up for that, having as few customers out as possible.

It's just an example of automation that we're doing. We're automating as much as we possibly can. A lot of this is now combined with self-learning and AI because then we can be more accurate in the automation than we were before. So I'm super excited to say that we're now clearly seeing the adoption of AI within T-Mobile has been pretty good, and we continue to adopt it in a big way.

One of the other questions, Ulf, is that one of the key things we have to do as an industry is connect to the ecosystem that is around us. This is about making sure we build platforms that expose the network which can be consumed by the ecosystem, and an ecosystem can declare an intent of what it wants from the network, and the network is able to deliver that. So can you give us a little bit of a feel for where in the journey you are with things like APIs and creating those monetization platforms that can serve practically any industry?

I mean, we joined the big API forum that has been created together with many other operators. But for us, the most important thing is that the people who want to work with us are able to connect in. So we also have our own APIs that we expose. We do things with partners of different kinds. We launched something called T-Life a couple of weeks ago? Sorry, T-Priority a couple of weeks ago, which we use for first responders. It's the first network slice for first responders – firefighters, police, etc. Many new requirements come in, like we would like to know the exact coverage over here. That's another thing we can now expose through APIs. So it's very important for us to open up the network for others to be able to use it. When I look at the enterprise business, it's a fast-growing area when it comes to partners that want to do things with us on our network. So it's a big deal.

Thank you. I want to ask you this question. We've been kind of partnering on the core side, on the automation side, on the API side of things. Can you give us a sense of how that partnership is going and any reflections on that?

Well, Raghav, I'm glad to be here first of all to pay tribute to our partnership, to your responsiveness and how fast we can move together. T-Mobile wants to move fast. We are deploying software at an unprecedented scale, as you know, and we can be pretty demanding too. But I think we are moving along the track that we don't want to go bespoke; we want to make sure we stay on 5G Advanced, which is one of the big things we're working on now, all the way generating new opportunities even up into sixth generation. So I couldn't be more happy to work with Nokia on this. You have an excellent R&D team; it's easy to deploy software for us, and you're going cloud-native faster than many others. So we're very excited about that.

Well, thank you, Ulf, and thank you for the time as well. But you know, you do have a very broad relationship with us as Nokia, and one of the areas I know that you're pioneering is AI-RAN. So just you could stay on stage for a little bit more because my colleague Tommy here has a few things that he would want to talk to you and some of our other customers as well. So Tommy, with that, I'd like to welcome you on the stage.

Hello everyone and welcome from my side as well to Mobile World Congress, the World Cup of speed dating for the next four days. In Pekka's opening, he referred to three growth engines or growth segments for Nokia: data center switching, defense, and private wireless for enterprise. In mobile networks, we are proud and humbled to have a chance to work on two of those: defense and private wireless. Defense is such a no-brainer. If you think about the wireless communication systems that NATO and many armed forces around the world have, they have systems optimized for voice, and the data capability is comparable to 3G. If they complemented those systems with dual-use 4G and 5G technology, they get 10 times the performance for one-tenth of the cost. No-brainer. We are super proud about the Lockheed Martin partnership, the first of many to come in this space. Now, there are other hot topics in mobile networks, and it's not a coincidence that Ulf is staying on stage because one topic I want to talk about is AI-RAN. T-Mobile USA has been one of the forerunners in exploring how to make AI-RAN happen and how to benefit from it. So let's first take a look at what AI-RAN is. If we simplify a little bit, start from the middle: we can use artificial intelligence for improving network performance – that's straightforward and obvious. There's been academic research for the past 10 years that AI and ML can beat legacy theories in network performance. But there's more than that. There are AI applications which you would want to run in the end-user device, like frameless glasses like mine, but you can't put all of the AI computing capability in this type of device. So you actually benefit from splitting the AI computing between the end-user device and the base station, the network. That's related to the third area: an operator in the United States has 990,000 base stations. They have dimensioned those base stations according to the busy hour traffic, but that capacity is not needed all the time. So what if we change the paradigm so that a base station site becomes a far edge cloud site with AI computing capability, and what if we could sell that extra spare capacity of AI computing to whomever happens to need it? These are the three ways we look at AI-RAN in the AI-RAN Alliance, where we were invited by our leading operator partners. With this, I would like to invite to the stage two more leaders: Vikram Sinha, the President and CEO of Indosat Ooredoo Hutchison from Indonesia, and Vakil Kavan from SoftBank of Japan, heading research in advanced technologies like AI-RAN.

So now let's start from Ulf. In the recent year, T-Mobile USA has been the operator who has really been shaping the future of mobile networks, exploring how far we can go with mobile technology. What is your vision now that you also focus so much on customer experience? It always starts from customer experience. What are you going to make out of AI in customer experience for the benefit of T-Mobile customers?

Well, first of all, thanks for your kind words about our company. I think our leading star at T-Mobile is always customer experience. When you take the lines and draw them out into the future, we soon find that devices are going to be very AI-heavy in the long term. Even though we have the best spectrum assets in the US market, which we are exploiting to the fullest in 5G now, we can see that there are great opportunities for future both for coverage and more capacity in terms of controlling beams and controlling radio capabilities even better than they are controlled today. Even early trials that we're doing together show that there is huge potential in applying AI technology. The capability of driving AI workloads with split rendering partly done on your device – your example of the glasses or whatever – and using the edge of our network to do some of that computing is really exciting. And then the topic we talked about before: automation. To be able to automate – I gave an example of hurricanes – we're automating as much as we can when it also comes to creating an even better customer experience. Those would be my AI-RAN thoughts for the future. I also want to say right off the bat, we're super excited about the AI-RAN Alliance, founding members together with SoftBank and a few others, and seeing that there is so much momentum around this. At the end of the day, we live in a standardized industry and we need to be able to drive large ecosystems with what we're doing. I'm super excited about that.

Sounds like AI is everywhere in your operation. It's like only our imagination is the limit to what you can make out of AI in your business. A lot of what we're doing together today already, and I think the future just holds more great things. Let's move to Vikram. Vikram Sinha has done one of the best jobs in the world, if not the best, in consolidating and integrating two operators and two networks. The only parallel would actually be T-Mobile US when you did that with Sprint. So you're in the same league, and that made you a big hero. But that's now done, so where do we go from here? We have discussed AI-RAN, but from our discussions I've noticed that in your case there's more than just AI-RAN and the network. Indonesia happens to be the third fastest-growing economy in the world in absolute terms, the fourth most populous country. I've somehow sensed that beyond the network, Indosat has some noble task and mission in the Indonesian context. So can you elaborate a little bit more on that and what that means?

First of all, thank you very much for your kind words. I think it's a very special thing sitting next to Ulf, I have to say. Now we have just completed three years of a merger, but I have to thank Nokia, especially you Tommy and Pekka. I'll highlight two things. Customer don't care about merger; they focus on experience – how is it improving? It was Nokia who came up with this famous Least Disruption Index; you were the first to give us that, and that has become the playbook in Asia. Many operators are following and many more want to follow. The second thing is the whole approach of strategic partnership. This whole merger integration of 50,000 sites – in fact 64,000 – was planned to be done in 36 months, all consultant, all clean team member bases, historical data. With support from Nokia, we did it in 11 months. So thank you, Pekka, Tommy, and the entire leadership team of Nokia. When you do such a bold thing, you can't do it alone; you need like-minded partners. For me personally and for my management team, the role model was T-Mobile. So I'm so happy that I'm sitting next to Ulf. I don't know how many of you know that Ulf calls Indonesia his second home – my wife is from Indonesia, so I got the opportunity to learn a lot. I think one of the things we picked up and worked for us was working for the larger purpose, culture of the larger purpose. Indosat is a very iconic brand, 57-year-old brand, first brand in Indonesia to connect Indonesia to the world. That is where we started our merger journey of empowering every Indonesian and staying true to that. You are right, we did it – 100 million customers, a lot of good things – but that is all behind us. Last year in August, at the Capital Market Day, what the merger did was give us scale. And then we said that our AI strategy has three pillars. Pillar one: we want to be an AI-native telco. It is very important; unless you are doing well on your core business, it's difficult to do new things. Again, with Nokia and other partners, we want to make sure how we bring AI learning from T-Mobile across. The second pillar was AI-native techco. We were very blessed that Nvidia chose us to be the NCP; we got our first GPU cluster ready. I was very impressed to see what Nokia is doing on that space with Corvus and all; we'll be very happy to build on that. But the real thing was the larger purpose: we wanted Indonesia to be a player in AI. Historically, a country like Indonesia has been seen as a taker, a country only for consumption. That larger purpose is so important. We have a new president in Indonesia, and he has given a target of 8% GDP growth and early adoption of AI. A well-research report released in January clearly demonstrates that it will help Indonesia from a level of 5% to move towards 8%, whether it is health, education, agriculture. These things create impact at scale. So we are in that exciting journey, a little bit learning from T-Mobile – dream big and doing is everything. We want to make sure we stay true to that.

Yeah, a noble mission for the great country of Indonesia. Great stuff. Let's move to Vakil. First of all, thanks for inviting us to the AI-RAN Alliance. You invited us in the early days, and you've done a lot of advanced research in the capabilities and the potential of using GenAI in radio networks. Now, our Bell Labs researchers have done different types of analysis of how traffic will be growing in networks without AI but also because of AI. I actually have to cheat – they say that by 2033 there would be 1,888 plus-minus exabytes per month of traffic going through mobile networks. So how do we make this work? What is your vision of how to architect the mobile network to be able to cater for all this traffic using AI?

Thanks, Tommy. SoftBank has been working on this AI infrastructure – infrastructure for AI. We've been developing the whole data center for training, but I think the data center for training is more on investment. Most important for operators is inference AI infrastructure. Where's the revenue come? We want to capture that revenue opportunity in operators' business. We need some technology to capture these AI inference revenue opportunities – that's AI-RAN. Operators have a very premium spot next to the customer in the base station everywhere nationwide. But somehow we cannot turn these premium spots into revenue opportunity. In the last decade, edge computing – we've been speaking about edge for more than a decade, but it's really not happening in the business wise, to be honest. But this is the last chance for operators to transform our premium edge into our revenue stream. That will be the key for operators to transform the dumb pipe to the premium pipe. So that's where we've been working very closely with Nokia. Nokia has the vRAN on some GPU server with their hardware acceleration card. We also bring our orchestrator on the same platform to turn and activate the GPU as a revenue source. Actually, we have a prototype and you will see the demonstration in the Nokia booth. This is a great collaboration because we just spent a few months – the speed of innovation was amazing. When we started this AI-RAN thing, thanks to T-Mobile for helping us, we have a very good momentum on the AI-RAN Alliance. One of the biggest concerns is the speed of innovation. AI is super fast. To be honest, big innovation in telco happens only every 10 years in G – 4G to 5G, 5G to 6G – the lifecycle was so different. But here we had a very great collaboration with Nokia and we made the engineering work and make it happen. So this is still the middle of the journey, and our business takes time. Network deployment takes a few years. So I hope we have a final product from Nokia soon, and I'm very looking forward to it.

Thank you. Very good. Now I think we have time only for one more question, unfortunately. I would have wanted to continue this discussion for the whole afternoon and evening with these three leaders. But if I have one question, I will direct this to Ulf. I said in the beginning that you can look at AI-RAN in three ways: improving network performance, making some AI applications work by splitting AI computing between end-user device and the network or base station, or making the base station site a far edge cloud site with AI computing and an AI factory. Which one of these three is the most important?

Wow, that's a difficult question because they are all sort of different diagonals and they intersect. Making use of our spectrum is very important – this industry is spectrum-intensive. I think we're making great progress. Vakil pointed to the trials we're doing, putting GPUs all the way out there. Not sure exactly when the architecture is ready to do that or where they should be – if it's a base station or maybe upstream a little bit – but I know we're exploring that together. I'm super excited about that; it can lead to those opportunities. But I think equally important is all the AI workloads that we can put on top that we could run for the whole network. I know you mentioned many of the things you guys are doing together with Nvidia as well, finding out these new opportunities. There are so many dimensions of this, it's hard to choose one, and I will not. So all three.

All right, very good. Thank you so much. This concludes this session. Thank you so much, and we will move to the next topic. Thank you.

Thank you very much, Tommy, and thank you all for the great presentations today. I'm Maria Vmar, head of external communications. Now we're moving on to the Q&A session where you have a chance to ask questions from our speakers from today. So let's also get our rest of our speakers back to the stage: Pekka, Federico, Raghav, please.

Let's wait until you're all comfortably seated before you are prepared to get hopefully tough questions. All questions to back up please. So all right, if you do have a question, please raise your hand and one of my lovely colleagues will hand you a microphone. Also, please limit yourself to one question and a brief follow-up. With that, let's get started and take the first question from the room.

Thank you so much, Maria. It's Julian de with Bloomberg. I'm going to sneak in two questions for Pekka and hopefully I'll make them tough. First, I want to ask about you mentioned that service providers make up 80% of Nokia's revenue currently. I know you don't like when I ask you questions about your time or Nokia's future when you are no longer a CEO, but what would you expect your revenues to be from defense and data center customers in the next two years? And I'll just sneak one in also about tariffs. I'm curious how you're preparing Nokia for the possibility of tariffs between the EU and the US.

Well, the growth areas including defense are major growth areas in terms of their potential, and we are talking about a market that is definitely offering a multi-billion dollar opportunity. But one thing I am not going to do here today is to announce some financial targets to my successor. That would not be prudent or professional. What we have said we will do is later this year we will have a Capital Market Day that will specifically focus on some of these growth areas, so that would be the time to get a little bit more concrete. On the tariff question, that's of course a tricky one since nobody really knows what's going to happen. The good thing with Nokia is that we have a supply chain approach where we rely pretty heavily on contract manufacturers. We have two fully owned factories of our own – one in Finland and one in India – but most manufacturing is done with contract partners, which gives us a lot of flexibility. We have manufacturing opportunities in different parts of the world, including for certain products in the United States. We were the first to announce a BEAD program-compatible broadband manufacturing in Wisconsin, and we started to build products there last year. With the acquisition of Infinera, we will have optical manufacturing including component manufacturing capabilities in the US. We just need to see where this will go. Obviously, a global tariff war would not be to anyone's benefit, and we certainly hope that would not happen, but we are ready for different scenarios.

Just as a quick follow-up, have you made any changes to your supply chains based on the possibility of tariffs coming up?

No, not really, but we are of course reviewing the plans. We are calculating different alternatives based on the scenarios we have. We have seen and we start to understand what the different options would be. I would say that the COVID and semiconductor crisis already made us regionalize our supply chain much better, which makes us better ready for this type of surprise events.

Thank you. Tommy and Pekka. And then for the next question, if you can please state your name and the organization you're representing.

Thank you. This is Jerry Karen with the Global Data. Thanks for all the comments and information, and congratulations Pekka on your decision to take the next step. My question is actually a follow-up to the one we just had regarding the growth strategy plan. Maybe it will be articulated more clearly by the Capital Markets Day you're talking about, but how do you balance the investments the company needs to make to achieve the objectives in those growth areas – data centers, defense, enterprise – while also continuing to invest in being a technological leader in the core massive traditional business around mobile networks? It seems to me to be quite a challenge.

Actually, first of all, that's a great question. Thanks for asking it. But actually these two are fairly complementary because the approach we are taking to these growth sectors is that we are using and reusing most of the R&D that we have already put in and continued to put in for the service provider businesses. For example, for data centers, we are taking all our carrier-grade features and capabilities and performance that we have learned in the operator networks and bringing them to data centers. When they are growing in scale and complexity, what are they going to need? They need performance, quality, uptime, programmability, flexibility, automation – which are exactly the features we have been developing for service providers. The same with mobile networks: two of the growth areas – defense communications and private wireless – both are leveraging the fundamental 5G R&D investment. Tommy is investing 2 billion per year in R&D; almost all of that is highly relevant in these growth segments as well. So these two are not mutually exclusive.

Thank you very much, Pekka. We have the next question from the back of the room, please.

Hi, Joe Madden, Mobile Experts. So you have your ecosystem for network APIs, Ericsson also has an ecosystem for network APIs. My question is: would it be advantageous to work together and create one single ecosystem, or is it better to compete?

Can I take that question? Thank you. I think what's important to understand is that there is going to be no single ecosystem that actually exists; there's going to be multiple ecosystems. So for us, it's important that we establish that being part of the Ericsson ecosystem is not something we are pursuing. We believe it is important to pursue a platform strategy which is much more connected to the network itself, and that's how we are building the platform and the automation required underneath that allows you to expose robust APIs northbound. So our strategy really is that we want to be playing in the network itself. I think there's going to be multiple ecosystems, and it's good that we're seeing these things exist because this is what's going to actually make it successful at the end of the day. So we see multiple ecosystems; we have no strategy of partnering there. We believe we have a good strategy that is working extremely well and will continue to do so.

Thank you, Raghav. Let's take the next question from the back of the room over there.

Hi, Dan Jones from Fierce Network. I'm going to dive back into the geopolitical a bit here. Has Nokia had any discussion with the US government about the US government taking a share in Nokia? Because there's obviously been some discussion in the media about that.

Well, the relationship with the US government and other relevant governments in the world obviously is extremely important. We are not commenting on any questions like that that you mentioned. We just say that we are partnering with governments and the US government, and our position in the US is obviously extremely important for us, but Europe is as well. These geopolitical developments that are now unfolding day by day are something we are very much focusing on, trying to understand. We would very much hope that in these technology strategy questions and the questions around trusted vendors and trusted connectivity, there would be cooperation between Europe and the United States because that would really benefit us all. If that is not the case, then we have to focus separately on both of these markets. But we are a classical example of a company that has been so proud of the fact that we are headquartered in Europe, but the US is our second home, and we certainly hope that to be the case also in the future.

I'll add to that that it's a little-known fact that Nokia has more wireless research and product development in the United States than all of our competitors combined. That's a fact.

Thank you very much, Tommy, for that one. Great to see that we have so many questions in the room. We still have time for a few more. Let's take the next one from the right side of the room.

Thank you. I'm Pablo Valerio for EE Times. I want to ask you about supply chains and basically cost. When we're looking at all these geopolitical issues happening right now, do you expect or are you calculating what would be the impact of tariffs all over the world between components and the way you manufacture your products and serve your customers?

Absolutely, we are calculating it. And again, it's impossible to be specific without knowing exactly how the tariff situation will develop. There are some tariffs announced; will there be retaliations? How that whole balance will go? But we have pretty good models, and both mobile networks and network infrastructure are obviously operating their calculations all the time. As I said earlier, we have a manufacturing model where we are pretty flexible, so we are able to move manufacturing from different parts to other parts if that is necessary. But specifically when it comes to the United States, I did mention that we do have some manufacturing assets there, but the reality is that when you go to the component level all the way to semiconductors and printed circuit boards, there is very little manufacturing capacity available in the US. Those types of supply chains take years and years to build. What businesses would need is predictability, and that is something we don't really feel we have at the moment. So we have to play it as well as we can, and again our asset in this whole game is flexibility.

Thank you very much, Pekka. Then we have a question from the back of the room, please.

Hi, Kieren Smith for the Financial Times. Just going to go back to geopolitics again. Obviously you were in Brussels in January, equality your views on the new commission. Do you think that they are open to consolidation and that's going to be a buzzword over the course of the next few days? And at what point, if they don't move fast enough to implement some elements of the Draghi report, would you consider moving any of your operations to the US? And do you think the administration over there might potentially be better for business, which is something that Deutsche Telekom's CEO said on their earnings call last week?

We have had multiple engagements, including events with Brussels. I'm actually a bit more optimistic about the situation with the European Union and the new commission now. First of all, they withdrew the detrimental proposal on introducing new standard essential patent regulation, which would have been directly harming European R&D and the competitiveness of Europe as a destination of R&D. So that was a very positive step. Now they have announced steps to ease some of the too burdensome regulation. As I said in Brussels a few weeks ago, businesses in Europe have really seen a regulatory tsunami hit them in the last few years. What is positive is that the new commission now seems to recognize that there is an issue. We have been behind the US in terms of competitiveness and regulation; now the US seems to be cutting more, so there is a risk that the gap increases, but the commission is now taking action. So I am optimistic. When you look at the mandate letters of the commissioners, there are also mentions about competition policy. We have said for a long time that it would be beneficial to our industry if there would be a smaller number of operators in Europe. The US has three to four nationwide operators, India has three, China has three, and Europe has – depending on how you calculate – over 200. It's too fragmented, which means operators don't have scale. We certainly support operator consolidation, and we need to now see the commission preparing a new Digital Networks Act that is supposed to address some of these problems. So we are engaging with them on a regular basis, but I am a bit more optimistic now because at least they are recognizing the problem.

Just to quickly follow up, if I can be cheeky: if they don't move fast enough, would you consider moving more operations to the US?

Again, as an outgoing CEO, I'm not going to announce any moves or put any threats. We are proud to be citizens both in Europe and the US, and we certainly hope that's the case also in the future.

Thank you very much, Pekka. We have time for two very quick questions and quick answers. So let's take the first one from the back of the room, please.

Thank you very much. Peter Jerck, GSMA Intelligence. I had a seven-part question about your future geopolitical outlook, but I'll give in to the time constraints. It was great hearing from all the business leaders; we appreciate the time. I think it's really important because each business has different dynamics, but I think most large organizations want to see the whole being greater than the sum of the parts. What synergies do you see across the businesses? We didn't hear a lot about synergies. How do you see those connecting the dots?

Well, maybe I start with a high-level answer and then ask my colleagues to jump in. There is a reason why we are operating three businesses as three P&Ls, but they are not separate companies because they have very important synergies on R&D, basic research, software, network orchestration, network automation, network cloudification, on the chipset supplier side – basically across the whole board of how networks are built, there are synergies across these businesses. But it is also to be recognized that in most cases, when customers make choices on their networks and vendors, the decisions for these three domains are made separately. That's why in our operational model we also decided to give them a fair degree of operational freedom and autonomy. But they are not three different companies; they are all part of Nokia, and we are maximizing the synergies in all those places where they exist.

I could add: if you look at the API ecosystem that grows across the network, we partner there to expose the network APIs. If you look at orchestration, we have to orchestrate the entire network, so there's orchestration on the services side and domain orchestration that comes from all the businesses. There's a lot of cooperation. There's the whole SMO architecture where we also collaborate. If you look at the private wireless edge strategy, which is again something where we bring routing technology from NI, bring the radios from mobile networks, and pull that whole integrated private network together – the level of synergies is actually quite high in terms of operability of how we're working together.

I would also say regarding core and radio, the way customers look at it, it's a mobility business where all the end-user-oriented features are actually defined by the capabilities of the core and radio. So if you're strong in core, it makes you more relevant in radio; if you're strong in radio, it makes you more relevant in core. We also benefit from joint research, 3GPP standardization. In that area of research and standardization, especially in the mobility area across core and radio, we certainly have synergies.

And maybe one example of what Tommy just said: I was talking about the defense business. That's a classical example of a solution where we have elements from all our businesses. When we sell a defense system, the miniaturized version of the tactical system for battlefield communications is actually a backpack that a soldier can carry, which includes both the core network and the base station in the same backpack. That's a real kind of field-proven integration across our businesses. You can see the backpack in the demo area – 8 kilograms, 256 users, 1-2 km cell radius, hiding plane sight, multi-radio 4G, 5G, MANET, connecting to other wireless systems of the military. Just a fantastic product.

Thank you very much for that very good answer. And now it's time for the last question. Over to you in the middle of the room.

Thank you. Ray Le Maistre from Telecom TV. Two different questions for different speakers. Is AI-RAN compatible with Open RAN? Because I've heard a few suggestions that maybe one should be prioritized over another or they're not completely compatible. And then for Federico, will there be optical product portfolio and optical team rationalization now that the Infinera deal is shut? Because it looks like there's a lot of products coming on board with that deal.

To the first question: AI-RAN is compatible with Open RAN. The way most people look at Open RAN is simply having the open fronthaul so that you can connect one supplier's radio unit to another supplier's DU and CU function in the baseband. AI-RAN is mostly about the computing opportunity on the baseband, could also be on the radio side, but they are really just compatible. AI-RAN is just one way of making cloud RAN.

Thank you very much, Tommy and Federico. That was our last question for today. So I would like to thank you all for great presentations and a great Q&A session in the room and those watching via the webcast. Here's the mandatory disclaimer that the presentations we made today might contain forward-looking statements which are subject to risks identified in detail on our latest 20-F documents. And now I would like all of you in the room to move to the networking area right outside this conference room, where we have some exclusive and very exciting demos and of course our energetic Nokia people to mingle with. I know that some of you didn't have time to ask all questions, so let's continue the questions there. But with that, thank you all, and we hope to see many of you during the coming days in our booth in Hall 3 at Mobile World Congress. Thank you everyone, and let's give a big hand to our speakers.