Nokia's Share Buyback: A Strategic Move to Offset Dilution

Nokia Corporation, a global leader in B2B technology innovation, has announced a share buyback program to offset the dilutive effect of new Nokia shares issued to the shareholders of Infinera Corporation and certain Infinera Corporation share-based incentives. The program, initiated 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 purpose of the repurchases is to reduce Nokia’s capital to offset the dilution from issuing additional shares. The repurchased shares will be cancelled accordingly, which can lead to an increase in earnings per share (EPS) for remaining shareholders. This is because the same amount of earnings is now distributed over fewer shares. Additionally, the reduction in total unrestricted equity can improve Nokia's financial health by reducing the amount of capital it has to raise from external sources.

As of 15 January 2025, Nokia has already repurchased 872,093 shares at an average price of EUR 4.45 per share, with a total cost of EUR 3,883,692. After these transactions, Nokia holds 229,091,173 treasury shares. This demonstrates that the company is actively executing its share buyback program and reducing its capital structure.



The share buyback program can have several implications on Nokia's share price and market position. By repurchasing and cancelling shares, Nokia reduces the number of outstanding shares, which can lead to an increase in the share price. This is because the value of each share is spread across fewer shares, making them more valuable. Additionally, the program can improve Nokia's market position by signaling to investors that the company is confident in its financial health and future prospects. By returning cash to shareholders, Nokia demonstrates its commitment to shareholder value and can attract more investors, potentially leading to an increase in market capitalization.

However, there are also potential risks associated with the share buyback program. If the market perceives the acquisition of Infinera Corporation as dilutive to Nokia's earnings, the share price could decline despite the buyback program. Additionally, if the market conditions change, or if Nokia's financial performance deteriorates, the program could be seen as a misallocation of resources, potentially leading to a decline in the share price.

In conclusion, Nokia's share buyback program is a strategic move aimed at offsetting the dilutive effect of new Nokia shares issued to the shareholders of Infinera Corporation and certain Infinera Corporation share-based incentives. The program can have positive implications on Nokia's share price and market position, but there are also potential risks that investors should be aware of. As Nokia continues to execute its share buyback program, investors will be watching closely to see how the market reacts to this strategic move.