Nokia (NOK) may be one of the leaders in the 5G right now, but the company still isn’t on the best position to relax on the market. Earlier this year, the company announced its plan to cut 180 jobs in Finland to reduce its growing operational cost. According to Reuters, this plan pushed through this month resulting to negotiation with employees to cut 148 jobs. Around 30 or more jobs were saved in the process. Nokia expect to reduce operational cost by at least $556 million by the end of 2020.
Now if that isn’t enough, Reuters reports that the company has drew a 500 million euro ($561 million) loan last month from European Investment Bank (EIB) for its Research & Development. The loan was agreed in August of 2018, and wasn’t available until last month. Nokia drew the loan on February 24.
There is no details yet from Nokia. But the company, upon signing the deal in 2018, said that the loan will be used to “further accelerate its research and development of 5G technology.”
To compete with Huawei and Ericsson, Nokia has to lessen weights to not sink down the bottom. The cost-cutting measure will give the company more available resources to spend on its R&D and future developments. Pekka Lundmark’s replacement of Rajeev Suri as CEO for Nokia could also give Nokia new strategies to win the 5G race.
Furthermore, Nokia needs even more resources to spend on its R&D. After all, winning 5G isn’t just about getting commercial 5G contracts from telecommunications companies. The more valuable patents the company has, the more secure their position in the 5G race is.