5G isn’t translating to significant growth, at least not yet for Nokia. The Finnish vendor today slashed its profit outlook for the remainder of the year and 2020 amid heightened competition in the early stages of 5G deployments.

The company met Wall Street’s expectations for third quarter 2019 profit, but shares are down more than 23% on news of the reduced outlook.

Nokia plans to increase investments in 5G research and development, particularly in its product roadmap to guard itself against vendors that provide 5G equipment and services at lower costs. The company says it will also invest further in system-on-chip based 5G hardware and aims to diversify the supply chain for those products.

The vendor warned investors that its customers in North America were reducing spending due to ongoing merger activity and other potential mergers or acquisitions. It didn’t specify which operators were facing “temporary capital expenditure constraints” but T-Mobile US and Sprint have been battling to get their proposed merger approved for almost 18 months, and that deal is unlikely to be resolved until 2020.

Nokia has 5G contracts with all four nationwide operators in the United States, which is currently its largest market for the new generation of network technology. The company said it has signed 48 commercial 5G deals and its equipment is live in 15 networks. Market leader Huawei reported 60 commercial 5G contracts earlier this month.

“Some of the risks that we flagged previously related to the initial phase of 5G are now materializing,” CEO Rajeev Suri said in a prepared statement. “In particular, our Q3 gross margin was impacted by product mix; a high cost level associated with our first generation 5G products; profitability challenges in China; pricing pressure in early 5G deals; and uncertainty related to the announced operator merger in North America.”

The vendor also flagged increased “competitive intensity” as other vendors “seek to take share in the early stage of 5G.” Suri said he expects Nokia’s recovery efforts to result in improved financial performance in 2021. The company is pausing dividend payments to investors as it tries to steady the ship and improve its cash position.

Nokia banked a net profit of $293 million on $6.31 billion in revenue, which represents a 4% year-over-year increase in revenue. The vendor’s networks business also grew revenues by 4% year-over-year, and its software business revenue grew 9% during the same period.

But the reduced guidance reported by Nokia contrasts with Ericsson, which forecast growth through 2020. Its rival reported a net loss of $710 million on $5.88 billion in revenue during Q3, but the losses were attributed to a $1.23 billion provision it recorded to cover a regulatory settlement over a bribery scandal that, in some cases, dates back to the ‘90s.

“Based on the evolving readiness of the 5G ecosystem and the staggered nature of 5G rollouts in lead countries, we expect full year 2019 will have seasonality characterized by a particularly weak first quarter, a strong second quarter, a solid third quarter and an expected strong fourth quarter,” Nokia said in a statement.