Nokia to replace CEO Rajeev Suri

With Nokia’s turnaround still seemingly distant, the Finnish networking vendor has decided it’s time for some fresh leadership.

Current Nokia CEO Rajeev Suri (pictured) will hand over the reins to Pekka Lundmark on 1 September of this year. Lundmark, who is Finnish, presumably has to work out six months notice at his current employer Fortum, one of the region’s biggest energy companies, where he is currently CEO. Lundmark also did some time at Nokia between 1990-2000.

“After 25 years at Nokia, I have wanted to do something different,” said Suri. “Nokia will always be part of me, and I want to thank everyone that I have worked with over the years for helping make Nokia a better place and me a better leader. I leave the company with a belief that a return to better performance is on the horizon and with pride for what we have accomplished over time. Pekka is an excellent choice for Nokia. I look forward to working with him on a smooth transition and wish him the best success in his new role.”

“I am honoured to have the opportunity to lead Nokia, an extraordinary company that has so much potential and so many talented people,” said Lundmark. “Together we can create shareholder value by delivering on Nokia’s mission to create the technology to connect the world.

“I am confident that the company is well-positioned for the 5G era and it is my goal to ensure that we meet our commitments to our customers, employees, shareholders and other stakeholders. Strong values, leading innovation and unflinching commitment to our customers have always been core to Nokia and I want to put this even more at our centre as we move forward.”

“With the acquisition of Alcatel-Lucent behind us and the world of 5G in front of us, I am pleased that Pekka has agreed to join Nokia,” said Risto Siilasmaa, Nokia Board Chair. “He has a record of leadership and shareholder value creation at large business-to-business companies; deep experience in telecommunications networks, industrial digitization, and key markets such as the United States and China; and a focus on strategic clarity, operational excellence and strong financial performance.”

“On behalf of the entire Board of Directors I would like to thank Rajeev for his many contributions to Nokia, where he has served with both honour and distinction. Rajeev’s loyalty, commitment, and deep personal integrity have served as an example to all of Nokia. I know that Rajeev will, like myself, always have Nokia blue running through his veins.”

That last sentence was presumably a nod to the fact that Siilasmaa is also calling it a day after eight years chairing the Nokia board, to be replaced by current Vice-Chair Sari Baldauf at the Nokia AGM in a month’s time. So this year will see the two people most individually responsible for Nokia’s current strategy and position leave the company. That’s a fairly major strategic rethink right there.

Suri oversaw a massive transformation of Nokia in his time heading up first Nokia Siemens Networks, from 2009-2014, then the whole company from 2014 until now. When Nokia bought Siemens out of their networking JV in 2013 it became clear that was the direction the company was headed in. This was confirmed when Nokia sold its shockingly diminished handset division to Microsoft the next year, along with its CEO at the time, Stephen Elop, which created the perfect platform for Suri to move into the top job.

He wasted little time in making his big strategic move: the acquisition of fixed-line giant Alcatel-Lucent to create an ‘end-to-end’ networking player. That was the narrative at the time and continues to be Nokia’s main unique selling point but, after an initial uplift, Nokia’s share price has slowly declined since then, implying all those lovely synergies have been slow to materialise. Share price reaction to this news seems neutral.

So the inference from Suri’s statement, that he’s just a bit bored and fancies a change, doesn’t really ring true. Chatting to industry figures about the news, the sense we get is that it was just time for a change. We haven’t heard any severe criticisms of Suri, just a sense that he may have run out of ideas. It could be argued that his job was to transform the company into a networking specialist and, having done so, it’s now time for someone else to take the ball and run with it.

Veteran telecoms Analyst John Strand reckons the Huawei situation has played a big part in Nokia’s current situation and thus Suri’s departure. One reason is what Strand characterises as “indirect government subsidies” in China, which have resulted in Huawei and ZTE now having a near monopoly among the Chinese MNOs. Recent industry estimates we have seen have Nokia’s share of that market as low at 3%.

Strand’s other point concerns the PR battle being waged by Huawei, in which it has become increasingly strident in its public statements in the face of US accusations. “He is a victim of a Chinese propaganda war,” Strand told us, indicating he thinks a stronger public performer is required now.

Whether or not Lundmark is such a person remains to be seen. He has been CEO of Fortum for five years and was CEO of Finnish crane company Konecranes for a decade before that. Among his executive positions at Nokia were VP of Strategy at Nokia Networks. So he certainly has the CV for the job, but this job marks a significant step up in terms of public profile.

Lundmark can presumably count on the full support of the board, though. Incoming Chair Sari Baldauf has not only been on the Nokia board since 2018 but was on the Fortum board for seven years prior to that and will have been his boss for a couple of years when she headed up the Nokia Networks business from 1998-2005.

So it looks like Nokia has decided it’s time for a fresh start and has put in place an experienced Finnish double act to do so. It would be odd for the company to make any other major strategic moves prior to Lundmark’s first day, but he will be hoping the quarterlies remain stable until he get’s the chance to make his mark.