Nokia worked its way back into profitable territory during the first quarter of 2021, and claimed its three-year turnaround plan is showing early signs of success. 

The Finnish company is still confronting many challenges, including early missteps on 5G radio access network (RAN) equipment, a major loss of business with Verizon, and an uncertain supply of semiconductors on the horizon, but CEO Pekka Lundmark conveyed confidence that Nokia’s reset is going as planned. 

Nokia’s newer 5G RAN equipment, which features a more competitive system-on-a-chip (SoC), represented 44% of all shipments during the quarter and the company said it’s on track to hit its target of 70% by the end of 2021.

However, Lundmark warned that “there is now less visibility to the semiconductor market in the second half of the year. … We want to see how the situation develops and continue to give it our full attention in close dialogue with our suppliers.”

He confirmed that previously revealed massive multiple-input, multiple-output (MIMO) 5G radios will be released “soon,” and more specifically in time to compete head-to-head with an unnamed competitor’s massive MIMO offering. Nokia hasn’t shared the specifications for that equipment yet, but Lundmark claimed it will have “wider bandwidth” and weigh less than the competition.

“We believe that it will be a highly competitive massive MIMO radio,” he said on the earnings call, according to a Seeking Alpha transcript. The competitors Lundmark referred to are likely Ericsson or Samsung. 

Nokia expects its total addressable market to grow 3% this year, due in large part to 5G demand and increased focus on residential broadband, according to Lundmark. “We also see growth opportunities in the market for enterprise and webscale with IoT, edge, and industrial digitalization,” he said.

“Consumers, businesses, and governments are all pushing for ultra fast connections to homes and workplaces, as working from home looks like it is here to stay,” Lundmark explained. 

Nokia said it inked contracts with 63 new enterprise customers in Q1 and roughly half of those organizations bought private wireless products or services from the vendor. “We now have over 290 private wireless customers,” Lundmark said.

The company’s largest business unit, Mobile Networks, reported a 4% year-over-year decline in revenue to $2.74 billion. Nokia’s leaders faced multiple questions about the lost business with Verizon during the call, and Lundmark was quick to point out that “Verizon remains our top three customer,” but noted that much of that activity is in other sectors of the business, including IP networks.

“There’s a lot of Nokia radio in their network. At the same time, it is a fact that we have not announced any large-scale 5G C-band radio deals with them,” he said. In fact, Verizon hasn’t announced any C-band radio deals with Nokia. The operator recently named Ericsson and Samsung as its only mid-band RAN vendors for that effort. 

Lundmark noted that the Mobile Networks unit was largely able to compensate for the Verizon loss during Q1 through deals with other operators, but he warned that the impacts will continue to be reflected in Nokia’s earnings through the remainder of 2021.

The company reported 160 commercial 5G contracts on the books and 63 live 5G network deployments to date.

Nokia’s Network Infrastructure business reported a revenue increase of 22% to almost $2.1 billion. Cloud and Network Services revenue declined 9% to $817 million, and Nokia Technologies reported a 5% year-over-year revenue increase to $442 million during the quarter.

Nokia banked almost $319 million in net income on $6.15 billion in sales, marking a 3% year-over-year increase in revenue. The company reported a net loss of $139 million during the first quarter of 2020.