Nokia’s new CEO Justin Hotard mixed optimism and uncertainty during his first earnings call, buoyed by a notable radio access network (RAN) win and new market opportunities but tempered by potential tariff-related headwinds.

Hotard kicked off the earnings call with a plea for patience as he only recently replaced long-time CEO Pekka Lundmark. Hotard previously served as head of Intel’s data center and artificial intelligence (AI) group.

That plea then led into a mission statement of leading Nokia toward greater operational efficiencies and continuing those efforts started under Lundmark, efforts underlined by disappointing overall results for the latest quarter.

Nokia’s overall sales were down slightly year over year, with growth in its larger operating segments (network infrastructure, mobile networks, cloud and network services) torpedoed by a drop in Nokia’s Technologies operations. Nokia CFO Marco Wiren explained that the division was boosted last year by catch-up payments tied to a licensing deal that this year’s results were not able to match.

Despite the gloomy start, Hotard was able to tout Nokia signing a new multiyear contract extension with T-Mobile US that has the vendor providing its AirScale RAN portfolio, which includes its Habrok massive multiple-input, multiple-output (MIMO) and Levante baseband products that use Nokia’s ReefShark system-on-chip. Nokia is also providing its AI-enabled MantaRay and AutoPilot self-organizing network (SON) systems.

Hotard demurred when pressed by analysts for more details.

“While we aren't sharing a lot of details on the contract, what we can share is it's a significant multiyear extension in our RAN contract,” Hotard stated. “We think that this is a great opportunity for us to partner, to shape the next chapter of mobile connectivity in the U.S. with T-Mobile, who's clearly an innovative leader in this space. And we're optimistic that this will continue to drive growth for us with T-Mobile.”

The deal extends a previous five-year agreement Nokia signed with T-Mobile back in 2021. That agreement, which also included T-Mobile US signing a deal with Ericsson, totaled a combined $40 billion and helped bolster the carrier’s 5G network reach.

How big was the RAN deal?

A few notable aspects of the Nokia contract extension was the focus on artificial intelligence radio access network (AI-RAN), the exclusion of any open RAN commentary, and the fact that Nokia scored a notable RAN deal with a U.S. operator.

Nokia was one of several vendors that were part of T-Mobile US’ push last year in forming the AI-RAN Alliance. That group is focused on using AI to help manage and control RAN deployments.

Analysts have pointed to the benefits AI can bring to the deployment and management of cloud-based open RAN networks, which are more complex orchestration challenges due to the disaggregated multivendor ecosystem. The use of AI could help close performance gaps for open RAN architectures compared with legacy RAN models.

The T-Mobile US deal was also devoid of any open RAN commentary, which further highlighted both that carrier’s so-far arms-length approach to open RAN and the ongoing move by AI-RAN in taking over some of the open RAN limelight.

T-Mobile US’ Nokia RAN commitment also helped to counter what has been a trying few years for the vendor in the U.S.

Verizon unceremoniously dumped Nokia from its 5G network upgrade plan in favor of smaller rival Samsung due to performance concerns, which was followed by AT&T omitting Nokia from its ambitious open RAN initiative and aggressively moving to replace Nokia gear with preferred vendor Ericsson.

That latter move was highlighted earlier this week when AT&T CEO John Stankey during that carrier’s earnings call stated its move to swap out Nokia equipment for Ericsson gear has produced better network performance characteristics than initially expected.

“That conversion as we go into those geographies opens up territory where we, because we had not done the modernization to the level we like with all of our spectrum assets and the most modern equipment, they typically were not open for fixed-wireless access [FWA], and that has opened up some footprint that will continue to open up as we go through that over the course of the next couple of years,” Stankey said. “And I would also tell you, on the margin, we’re seeing better performance off of that investment than what we would have anticipated.”

Nokia has been moderating its RAN troubles with a broader focus into its data center and networking business, including the recent close of its $2.3 billion Infinera acquisition. Hotard views this space as ripe for gaining more AI-based traction.

“This is about giving us incremental access in the U.S., which is a high-growth geography, and of course, with hyperscale customers who are driving much of the AI and data center build,” Hotard said of that focus. “And the way I think about the market in AI, particularly with optical is if you look at the build-out of data center, what's happening with AI is it's driving, as we all know, significant new data center build, but it's also driving new connectivity demands between data centers, both whether it's for training or inference or some of the convergence we're seeing with AI reasoning models.”

Nokia braced for tariff impact

Like most executives, Hotard was pressed for his view on the current tariff tiff sweeping the trading world, and like those other executives, Hotard cited ongoing volatility around the issue.

“While we are not immune to the evolving global trade landscape, my initial customer feedback indicates that our markets should prove to be relatively resilient,” Hotard said, a notion that other vendors in the space are also expressing.

Hotard did note that the vendor could see up to approximately $34 million in tariff-related impact on operating profits for the second quarter. However, he added that the vendor did have some manufacturing options, including five U.S.-based manufacturing facilities.

“Our supply chain teams are proactively working to further mitigate the exposure, leveraging our global manufacturing network, therefore, our guidance remains unchanged,” Hotard said. “For clarity, considering the volatility of the situation, we have not taken an assumption related to tariffs in our second half of 2025.”