Nokia Repurchases Own Shares: A Strategic Move to Offset Dilution

Nokia Corporation, a global leader in B2B technology innovation, has announced the repurchase of its own shares on 05.02.2025. 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. By repurchasing and subsequently cancelling these shares, Nokia seeks to maintain shareholder value and mitigate the negative impact of the issuance of new shares on its financial performance.

The repurchase program, announced on 22 November 2024, targets to repurchase 150 million shares for a maximum aggregate purchase price of EUR 900 million. The repurchases started on 25 November 2024 and are expected to end by 31 December 2025. The program is based on the authorization granted to the Board of Directors by Nokia's Annual General Meeting on 3 April 2024.



The repurchase program will reduce Nokia's capital by offsetting the dilution from issuing additional shares. The repurchased shares will be cancelled accordingly, which will reduce the Company's total unrestricted equity. This reduction in capital structure can have several implications for Nokia's financial health and future prospects.

Firstly, the repurchase program can improve Nokia's earnings per share (EPS) by reducing the number of outstanding shares. This increases the earnings per share for the remaining shareholders. Secondly, it can enhance Nokia's return on equity (ROE) by generating the same amount of net income on a smaller capital base. Additionally, the repurchase program may lead to an increase in dividend payouts, making Nokia's shares more attractive to income-oriented investors.

However, the repurchase program may also limit Nokia's flexibility for future acquisitions by reducing its capital structure. By reducing its capital structure, Nokia may have fewer shares available for issuance as consideration for future acquisitions. However, the repurchase program is specifically aimed at offsetting the dilution from the Infinera acquisition, so this impact may be limited to that particular transaction.

In conclusion, Nokia's decision to repurchase its own shares is a strategic move to offset the dilutive effect of new shares issued to Infinera Corporation shareholders and certain Infinera Corporation share-based incentives. The repurchase program is expected to have a positive impact on Nokia's EPS and ROE by reducing the number of outstanding shares. However, it may also limit Nokia's flexibility for future acquisitions by reducing its capital structure. The repurchase program aligns with Nokia's long-term growth strategy and aims to maintain shareholder value and ensure that the company's financial performance is not negatively impacted by the issuance of new shares.