Strategy and operating model update

16 December 2020

1 © 2020 Nokia
Disclaimer

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statements in the Outlook section and statements preceded by any obligation to publicly update or revise forward-looking compliance with IFRS, and either of these financial measures as
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order to better reflect the underlying business performance.

2 © 2020 Nokia
Welcome
Pekka Lundmark 4. Strategic analysis
President and CEO 10. Business group update, including market
dynamics, our competitive positions, strategic
imperatives and financial expectations

Marco Wirén 25. Strong capital structure and prudent financing

CFO strategy
27. Prioritizing capital towards areas
where we can achieve leadership
28. Driving a lean corporate structure
29. Clear and transparent reporting and
communication

3 © 2020 Nokia
Strategic analysis

4 © 2020 Nokia
Technology is vital in solving the world’s challenges

Pressure on the Productivity Access to opportunity remains

planet is increasing is stalling stubbornly unequal
Reducing carbon emissions Bringing digitalization to Providing more inclusive access
and optimizing our use of the physical industries it to work, healthcare and
scarce resources has not yet reached education

5 © 2020 Nokia
A summary of our six strategic beliefs

1. Networks play an increasingly important role in

society. This allows us to extend our focus to
serving Critical Networks beyond CSPs.

6 © 2020 Nokia
Critical Networks
Networks are playing an increasingly important role in society. This is allowing us to
extend our focus to serving Critical Networks beyond CSPs.

Carrier-grade
Critical Networks Webscale
resilience and Intelligent, automated, elasticity
performance self-optimized and and flexibility
on-demand

7 © 2020 Nokia
A summary of our six strategic beliefs

1. Networks play an increasingly important role in 4. Re-establishing technology leadership in some

society. This allows us to extend our focus to segments requires us to anticipate, shape and
serving Critical Networks beyond CSPs. invest in the next technology window – where there
is no path, we will reassess segment participation.

2. Critical Networks are built based on a best-of- 5. Over the longer term, value in Critical Networks is
breed approach with network elements migrating away from monolithic systems towards
selected on a best performance per TCO silicon, software and service and will be captured
basis. through different business models.

3. Technology leadership underpins momentum 6. Sustained investment in long-term

and financial returns in Critical Networks. innovation provides us with a platform to
take the long view.

8 © 2020 Nokia
Our focus areas

For customers A trusted partner for Critical Networks

For shareholders Drive long-term value growth

Build our cloud Strengthen our long-

Secure technology
What software and network term research and
leadership
services future patent portfolio

Invest in a best-of-breed portfolio

How
Renew our operating model, capabilities and culture

9 © 2020 Nokia
About our business

10 © 2020 Nokia
Mobile Networks
Net sales of approximately € 10bn*

Portfolio Objective
• Radio Access Network (RAN) Create value by regaining
and Microwave Radio Link industry leadership in wireless
products, and related mobility networks and
network management associated services
solutions
Tommi Uitto • Network planning,
President, deployment, optimization
Mobile Networks and technical support
services

* Indicative only, in the last four quarters.

11 © 2020 Nokia
Mobile Networks ~1%
Market CAGR

Slight overall market growth with significant

growth in enterprise:
43 44
• 5G is driving customer demand
• Growth in ORAN and vRAN – we are investing to
improve our technology leadership
• Trust and security are increasing in importance 2020 2023
in EUR billion, excluding China
Competitive position:
• #2 in 4G and 5G, excluding China Market share
• #2 in rollout services, globally 4G and 5G, excluding China

27%
Source for estimates: Dell’Oro rolling four quarters for competitive position
External analysts and Nokia analysis for market, excluding China

12 © 2020 Nokia
Mobile Networks
Focus areas and expectations
Comparable* operating margin %
Strategic imperatives
• 2021: Execute ongoing turnaround and drive
competitiveness in 5G and services digitalization
2021:
• Leadership in 5G and ORAN/vRAN and maintaining around zero
scale with CSPs
• Grow enterprise-dedicated Private Wireless
Networks business
• High performance and learning culture and lean
operating model Longer term:
significant
• Accelerate cost reduction across products, services
improvement
and power consumption

*Comparable results exclude amortization of acquired intangibles, restructuring and other items affecting
comparability. The information provided reflects Nokia’s new operating model, effective January 1, 2021.

13 © 2020 Nokia
Network Infrastructure
Net sales of approximately € 7bn*

Portfolio Objective
• IP Networks Create value by being the
• Optical Networks world’s most trusted partner,
with best-of-breed solutions
• Fixed Networks for the world’s most Critical
• Alcatel Submarine Networks Networks
Federico Guillén
President,
Network Infrastructure

* Indicative only, in the last four quarters.

14 © 2020 Nokia
Network Infrastructure ~3%
CAGR
Market

Overall growth driven by enterprise and

43 47
webscale; CSP market flattish:
• Market factors, including the 5G cycle, drive
customer demand
• Trust and security are increasing in importance 2020 2023
in EUR billion, excluding the submarine cable market
Competitive position:
• #3 in CSP IP routing (edge and core) – Market CSP IP Optical Fixed
#2 excluding China share routing networking access

#4 in optical networking (WDM) –

18% 11% 19%
•
#3 excluding China Global

• #2 in fixed access networks (ONT, OLT, DSL) -

#1 excluding China
25% 17% 32%
Excluding
• Leader in submarine networks China
Source for estimates: Dell’Oro and Omdia rolling four quarters for competitive positions
External analysts and Nokia analysis for global market
15 © 2020 Nokia
Network Infrastructure
Focus areas and expectations
Strategic imperatives Comparable* operating margin %
• Expand leadership in IP routing for CSPs, establish
data center switching/routing business and grow
in enterprise/webscale switching and routing 2021:
high single digit
• Grow optical sales into CSPs, webscale and
enterprise while driving cost savings through
targeted vertical integration
• Maintain leadership in fiber access and in 5G fixed
wireless access
Longer term:
• Expand leadership position in submarine networks gradual
while scaling up our capacity improvement

*Comparable results exclude amortization of acquired intangibles, restructuring and other items affecting
comparability. The information provided reflects Nokia’s new operating model, effective January 1, 2021.

16 © 2020 Nokia
Cloud and Network Services
Net sales of approximately € 3bn*

Portfolio Objective
• Communications software Create value by leading the
• Mobile and converged core industry transition to cloud-
solutions native software and as-a-
service delivery models, as
• Enterprise solutions demand for Critical Networks
Raghav Sahgal • Cognitive services accelerates
President, • Managed services
Cloud and Network Services

* Indicative only, in the last four quarters.

17 © 2020 Nokia
 ~2%
Cloud and Network Services CAGR
Market 27
26
Significant value shift towards critical -9% 12
Legacy 15
networks with growth in:
• Cloud-native, open architecture software +14% 16
Future 10
• Advanced, cognitive services
• As-a-service delivery models 2020 2023
• Industry 4.0 solutions, driven by 5G in EUR billion

Competitive position:
Market share
• #1 in telecommunications software and Telecommunications software and
software services software services

7%
• Leader in cognitive automation
• #1 in industrial private wireless*
Source for estimates: Analysys Mason and GlobalData for competitive positioning
External analysts and Nokia analysis for market
* Customer wins
18 © 2020 Nokia
Cloud and Network Services
Focus areas and expectations
Strategic imperatives Comparable* operating margin %
• Fully transition to cloud-native portfolio
• Expand cognitive service capability
2021:
• Boost leadership in private wireless mid single digit
• Build network-enhanced industrial automation
• Transition to as-a-service delivery models
• Strengthen and scale partner ecosystem
Longer term:
significant
improvement

*Comparable results exclude amortization of acquired intangibles, restructuring and other items affecting
comparability. The information provided reflects Nokia’s new operating model, effective January 1, 2021.

19 © 2020 Nokia
Nokia Technologies
Net sales of approximately € 1.4bn*

Portfolio Objective
• Patent licensing Create value by maintaining our
• Technology licensing industry-leading patent
portfolio and growing Nokia’s
• Brand licensing intellectual property licensing

Jenni Lukander
President,
Nokia Technologies

* Indicative only, in the last four quarters.

20 © 2020 Nokia
Nokia Technologies
Industry-leading patent portfolio; circa 20,000 Agreement Achieved
• Company
reached objectives
patent families, including 3,500+ 5G standard
essential patent families 2008 Huawei 
• An independent report concluded that Nokia is 2011 Apple 
#1 for ownership of granted patents found 2012 Blackberry 
essential to the 5G Standard*
2014 HTC 
• Strong licensing track record across the
segments we focus on 2015 LG 
• 200+ licensees across all programs 2016 Samsung 
2017 Apple 
2017 Xiaomi 
Competitive position, based on 2019 licensing revenue
2017 Huawei 
#2 2018 OPPO 
2018 Vivo 
* Source: PA Consulting 2019 Samsung 
The list of licensees is not all inclusive, it is for illustration purposes only and may include
past and/or current licensees and does not imply future license renewals
21 © 2020 Nokia
Nokia Technologies
Focus areas and expectations
Strategic imperatives Comparable* operating profit

• Drive innovation by investing in 5G and multimedia R&D

and standardization and continuing to renew our 2021:
industry-leading patent portfolio for the long term slight improvement
• Continue successful smartphone licensing by securing year-on-year
renewals for the major mobile device deals at favorable
rates and licensing remaining uncontracted vendors
• Continue to diversify and grow in new segments,
including Automotive, Consumer Electronics and IoT,
and further leverage broad technology assets Longer term:
stable
• Build brand partnerships and grow brand value by
developing new brand licensing opportunities, including
in smart home and other connected devices
*Comparable results exclude amortization of acquired intangibles, restructuring and other items affecting
comparability. The information provided reflects Nokia’s new operating model, effective January 1, 2021.

22 © 2020 Nokia
Our refreshed operating model

Mobile Network
Networks Infrastructure
Customer
Cloud and
Experience Nokia
Network Services Technologies

CFO Corporate Legal and Strategy and

People
Organization Affairs Compliance Technology

Lean corporate center enabling fully accountable business groups

23 © 2020 Nokia
CFO remarks
Marco Wirén 25. Strong capital structure and prudent financing
CFO strategy
27. Prioritizing capital towards areas
where we can achieve leadership
28. Driving a lean corporate structure
29. Clear and transparent reporting and
communication

24 © 2020 Nokia
Strong capital structure and prudent financing strategy
The foundation for our long-term stability and liquidity, as well as our ability to invest in
R&D to ensure technology leadership

We target an We intend to maintain We are driving value We will continuously

investment grade a level of total cash creation through review our
credit rating. and other liquid improved focus on competitive positions
assets at 30% or capital allocation, and address our
more of annual net both at the Nokia portfolio accordingly.
sales. Group level, as well as This could mean
at the business group divestments and/or
level. bolt-on acquisitions.

25 © 2020 Nokia
Clear capital allocation priorities

Our primary focus

is to deploy our capital towards organic or inorganic investments to ensure technology leadership in
areas where we have a clear path towards creating shareholder value, while maintaining a strong capital
structure and prudent financing strategy.

Our next priority

is to provide shareholders with capital returns. Naturally, in connection with the work on the strategic
and financial targets, we will assess also the dividend policy.

26 © 2020 Nokia
We are creating long-term shareholder value by prioritizing capital

• We have four focused business groups with full operative P&L

and operating cash flow ownership and accountability.
Prioritizing Each business group is focused on creating shareholder value
capital towards
•
by prioritizing capital towards attractive areas – typically the
industry leaders create more value.
areas where we
Each business must earn more than its cost of capital. At a
can achieve
•
minimum, there must be a credible path to value creation.

leadership • In addition, we see opportunities for each business group to

streamline and optimize its cost base and working capital, over
time.

27 © 2020 Nokia
We are driving a lean corporate structure

• Moving forward, as much as possible, costs and headcount will be

directly embedded in the business groups and the business groups
Empowering will be able to control these costs
business • No allocations

groups with full • ~14,000 people will be moved from corporate to

business groups
accountability • In addition, we have further potential to optimize our centralized
corporate activities, over time

28 © 2020 Nokia
We are committed to clear and transparent reporting
and communication
Our focus Our goal Our commitments, beginning 2021
• Open and transparent • To make it easier to assess • Our external reporting will mirror our
communications and value each of our four internal reporting
business groups • We will provide P&L transparency to each of
our four business groups
• We will host CMDs with a regular cadence

29 © 2020 Nokia
Improving reporting – an example

Beginning 2021, we intend to Q1-Q3’20 example

supplement our reported IFRS
EUR million
results by also reporting
“Comparable operating profit,” Reported operating profit 444
which excludes items affecting Amortization of acquired intangible assets -308
comparability.
Restructuring and associated charges -337
Furthermore, we will disclose Gain on defined benefit plan amendment 90
the excluded items up front in
Impairment of assets, net of impairment reversals -25
our interim reports.
Other 0

Comparable operating profit 1 025

30 © 2020 Nokia
Q&A

31 © 2020 Nokia