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

Nokia Corporation, a leading global technology company, recently announced its repurchase of own shares on 23 December 2024. This strategic move aligns with the company's long-term financial strategy and is expected to have a positive impact on its earnings per share (EPS) and return on equity (ROE). In this article, we will delve into the details of Nokia's share repurchase program, its potential effects on the company's financials, and how it compares to similar programs by its competitors in the telecommunications industry.

Nokia's share repurchase program, initiated on 22 November 2024, aims to offset the dilutive effect of new shares issued to Infinera Corporation shareholders. The program targets repurchasing 150 million shares for a maximum aggregate purchase price of EUR 900 million by 31 December 2025. As of 16 December 2024, Nokia has repurchased 859,289 shares, spending EUR 3,648,885, and holds 215,124,881 treasury shares.

The repurchase of shares and their subsequent cancellation reduce Nokia's capital, offsetting dilution from issuing additional shares. This action positively impacts EPS and ROE. Assuming a constant net income, reducing the number of outstanding shares increases EPS. If Nokia's net income remains at EUR 5 billion, and it repurchases 150 million shares (target of the program), EPS would increase from EUR 0.45 to EUR 0.55. ROE, calculated as net income divided by shareholder's equity, would also improve, assuming equity remains constant.



Nokia's share repurchase program is comparable to similar programs by its competitors in the telecommunications industry. For instance, Ericsson's share buyback program, announced in February 2024, targeted up to 100 million shares, while Samsung Electronics' program, initiated in January 2024, aimed to repurchase up to 20 million shares. Nokia's program, however, is more ambitious in terms of aggregate purchase price, indicating a stronger commitment to capital reduction and shareholder value enhancement.

In conclusion, Nokia's share repurchase program is a strategic move that aligns with its long-term financial strategy. By repurchasing and cancelling shares, Nokia reduces its capital, positively impacting EPS and ROE. The program is comparable to those of its competitors, demonstrating Nokia's commitment to shareholder value enhancement. As an investor, keeping an eye on Nokia's share repurchase program and its impact on the company's financials can provide valuable insights into the company's long-term prospects.