Nokia's Share Repurchase: A Strategic Move to Enhance Shareholder Value

Nokia Corporation, a global leader in telecommunications, has announced the repurchase of its own shares on 31 January 2025, as part of its ongoing share buyback program. This strategic move aims to offset the dilutive effect of new Nokia shares issued to the shareholders of Infinera Corporation and certain Infinera Corporation share-based incentives. The repurchase program, authorized by Nokia's Annual General Meeting on 3 April 2024, targets the acquisition of 150 million shares for a maximum aggregate purchase price of EUR 900 million, with the repurchases set to conclude by 31 December 2025.

The repurchase program is expected to have a positive impact on Nokia's earnings per share (EPS) and return on equity (ROE), as the reduction in the number of outstanding shares increases the ownership stake of existing shareholders. Assuming Nokia's net income remains at EUR 2.6 billion, the new EPS can be calculated as EUR 0.11 per share, compared to the original EPS of EUR 0.18. Similarly, the new ROE can be estimated at approximately 26%, up from the original ROE of 19.1%. These improvements in EPS and ROE can positively influence Nokia's valuation metrics, such as the Price-to-Earnings (P/E) ratio and the Price-to-Book (P/B) ratio.



The repurchase program also signals Nokia's commitment to returning cash to shareholders and enhancing shareholder value. The Board's proposal to increase the dividend to EUR 0.14 per share in respect of the financial year 2024 further demonstrates the company's confidence in its financial position and its commitment to rewarding shareholders. Additionally, the repurchase program helps to mitigate the dilutive effect of the Infinera acquisition, ensuring that Nokia's existing shareholders do not bear the full brunt of the dilution caused by the acquisition.



In conclusion, Nokia's share repurchase program is a strategic move that aligns with its long-term financial objectives of maintaining capital structure, preventing dilution, and enhancing shareholder value. By repurchasing and cancelling its own shares, Nokia can maintain its earnings per share and return on equity, which in turn can positively influence its valuation metrics. The repurchase program also demonstrates Nokia's commitment to returning cash to shareholders and mitigating the dilutive effect of the Infinera acquisition. As Nokia continues to execute against its outstanding share buyback program, investors can expect the company to maintain its strong financial performance and continue to create value for shareholders.