Nokia and its Swedish rival Ericsson have launched cost-cutting programmes as their customers have reduced spending amid a slowing global economy.

The Finnish firm reported a profit of €679 million (US$739 million) for last year, down 84% from 2022.

“In 2023 we saw a meaningful shift in customer behaviour impacting our industry driven by the macro-economic environment and high interest rates along with customer inventory digestion,” Nokia chief executive Pekka Lundmark said in an earnings statement.

“We expect the challenging environment of 2023 to continue during the first half of 2024, particularly in the first quarter,” he added.

Nokia reported an 11% drop in net sales last year to €22.26 billion driven by a drop in investment by mobile network operators in North America.

The results were also affected by a slowdown in the deployment of 5G networks in India.

Nokia said last year it could cut its workforce by up to 14,000 people, reducing costs by up to €1.2 billion by 2026.

The company also lost a battle with Ericsson for a US$14 billion five-year contract with US company AT&T.

But Lundmark said the outlook could improve in the second half of this year.

“We are now starting to see some green shoots on the horizon, with improving order intake for network infrastructure and some of the specific deals we have won,” he said.

For its part, Ericsson warned Tuesday that it expected further market decline outside China this year after booking a loss of 26.1 billion kronor (US$2.5 billion) last year.

Nokia, Ericsson and Chinese firm Huawei are locked in a fierce battle for 5G business around the world.