Nokia's Strategic Share Buyback: Enhancing Shareholder Value

Nokia Corporation, a global leader in telecommunications and technology, recently announced the repurchase of its own shares on 11 December 2024. This strategic move aligns with the company's long-term financial strategy, aiming to offset the dilutive effect of new shares issued to Infinera Corporation shareholders and incentivized employees. By repurchasing 150 million shares for a maximum aggregate purchase price of EUR 900 million, Nokia seeks to enhance shareholder value and maintain its capital structure.

On 11 December 2024, Nokia repurchased 872,093 shares at an average price of EUR 4.17, totaling EUR 3,636,192. This brings the total treasury shares held by Nokia to 212,521,406. The repurchase reduces the number of outstanding shares, positively impacting earnings per share (EPS) for remaining shareholders. Assuming a constant net income, the EPS would rise from EUR 0.15 to EUR 0.16, a 6.67% increase. The return on equity (ROE) would also improve, from 10.67% to 11.33%, as the repurchase reduces the denominator in the ROE calculation.



The repurchase also affects Nokia's debt-to-equity ratio and overall capital structure. Assuming Nokia's total debt remains constant, the debt-to-equity ratio will decrease, indicating a more conservative capital structure. This demonstrates Nokia's commitment to enhancing shareholder value through strategic capital allocation.



In conclusion, Nokia's share repurchase program is a strategic move that aligns with the company's long-term financial strategy. By offsetting the dilutive effect of new shares and reducing the number of outstanding shares, Nokia enhances shareholder value, improves EPS and ROE, and maintains a conservative capital structure. Investors should consider Nokia's strategic initiatives when evaluating the company's long-term prospects.