Nokia's Share Buyback: A Strategic Move for Shareholder Value

Nokia Corporation, a global leader in telecommunications and technology, recently announced the repurchase of its own shares on 10 December 2024. This strategic move aligns with the company's long-term financial strategy, aiming to enhance shareholder value and mitigate dilution from newly issued shares related to its acquisition of Infinera Corporation.

Nokia's share buyback program, initiated in March 2024, targeted the repurchase of up to 150 million shares by the end of 2025, with a maximum aggregate purchase price of EUR 900 million. As of 10 December 2024, Nokia had repurchased 157,646,220 shares, with the program completed on 21 November 2024. The repurchases were executed through public trading on Nasdaq Helsinki and selected multilateral trading facilities, otherwise than in proportion to the existing shareholdings of Nokia's shareholders (directed repurchases).

The share buyback program has a positive impact on Nokia's earnings per share (EPS) and return on equity (ROE). By reducing the number of outstanding shares, the EPS increases, assuming a constant net income. For instance, if Nokia's net income remains at EUR 5 billion and it repurchases 150 million shares, EPS would increase from EUR 0.35 to EUR 0.40. Additionally, the share buyback reduces the denominator in the ROE calculation, potentially increasing ROE. If Nokia's net income remains at EUR 5 billion and it repurchases 150 million shares, ROE would increase from 14% to 16%.



The repurchase of shares also influences Nokia's debt-to-equity ratio and overall financial leverage. By reducing unrestricted equity, the share buyback program decreases Nokia's debt-to-equity ratio, indicating a stronger financial position. As of 10 December 2024, Nokia had reduced its unrestricted equity by EUR 600 million through the repurchase of 157,646,220 shares.



In conclusion, Nokia's share buyback program is a strategic move that aligns with the company's long-term financial strategy. By repurchasing its own shares, Nokia enhances shareholder value, mitigates dilution, and improves its financial position. Investors should consider the positive impact of the share buyback program on Nokia's EPS, ROE, debt-to-equity ratio, and overall financial leverage when evaluating the company's stock.