By Parmy Olson 

Nokia Corp.'s Rajeev Suri is stepping down as chief executive, amid the Finnish telecom-equipment maker's struggle to take advantage of a global shift to the newest generation of mobile networking.

Mr. Suri will be replaced by Pekka Lundmark, who starts his new role on Sept. 1, the company said. Unlike Mr. Suri, who is a 24-veteran of Nokia, Mr. Lundmark comes from outside the company. He is currently chief executive of Finnish energy company Fortum.

Nokia has been battling Ericsson AB of Sweden and China's Huawei Technologies Co. to provide equipment powering the latest generation 5G mobile networks to telecom companies globally. 5G promises faster connection speeds and the ability to connect troves of new devices to the internet. But its rollout has been challenging for Nokia.

Last October, Nokia's shares dived 20% after the company announced it would halt its dividend to help cover the growing costs of developing, building and selling 5G equipment.

In February, the company warned of flat demand for telecom equipment and rising competition for 5G deals in the year ahead.

Nokia and its closest competitor, Ericsson, have fought to take advantage of a recent campaign by U.S. officials to pressure other countries not to integrate Huawei into their systems, alleging its gear poses a national security threat. Huawei has denied any spying threat from its devices.

Picking up any business that falls away from Huawei has been seen as critical in the separate turnaround efforts at both Nokia and Ericsson, which are the No. 2 and No. 3 telecom-gear makers by sales, respectively, with Huawei at No. 1.

Nokia's wider difficulties stem in part from digesting its $16.6 billion acquisition of Alcatel Lucent S.A., a deal Mr. Suri oversaw in 2015. Though the deal was aimed at growing Nokia's communications products and creating a one-stop shop for telecom companies, it also made it more challenging for the company to accelerate its own efforts in 5G, according to one Nokia executive.

Nokia's chairman, Risto Siilasmaa, alluded to the Alcatel issue on Monday in an official statement announcing Mr. Suri's departure, saying, "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."

Nokia, which started life in 1865 as a paper mill concern, has made dramatic changes to its business over the course of its history. It was the world's biggest mobile-phone vendor by sales through the early 2000s before becoming usurped by Apple Inc.'s iPhone and other manufacturers like Samsung Electronics Co, which were aligned with the Android operating system made by Alphabet Inc.'s Google.

After selling its smartphone business to Microsoft Corp. in 2014, Nokia put Mr. Suri in the top job in April that year, refocusing the company on becoming a wireless-only business. Mr. Suri, 52 years old, was born in India and became a Singaporean citizen. He had replaced Stephen Elop, a Canadian executive who joined the company from Microsoft in 2010, until Nokia sold its handset business to the Redmond, Washington-based company.

Write to Parmy Olson at parmy.olson@wsj.com

 

(END) Dow Jones Newswires

March 02, 2020 05:13 ET (10:13 GMT)

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