Nokia's Share Buyback: A Strategic Move to Offset Dilution and Enhance Shareholder Value

Nokia Corporation, a global leader in B2B technology and 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, authorized by Nokia's Annual General Meeting on 3 April 2024, targets to repurchase 150 million shares, for an aggregate purchase price not exceeding EUR 900 million. The repurchases will start at the earliest on 25 November 2024 and end latest 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, reducing the Company's total unrestricted equity. The program will be terminated if the acquisition is cancelled.

Nokia's share buyback program is a strategic move aimed at maintaining shareholder value and offsetting the dilutive effect of the Infinera acquisition. By repurchasing and cancelling its own shares, Nokia is effectively reducing the number of outstanding shares, which can have several positive impacts on the company's capital structure and shareholder value.

Firstly, with fewer shares outstanding, the earnings per share (EPS) will increase, making the company's shares more attractive to investors. This is because EPS is calculated as net income divided by the number of outstanding shares. For example, if Nokia repurchases and cancels 150 million shares, and assuming net income remains constant, EPS would increase by approximately 1.5% (150 million shares out of 10 billion outstanding shares, assuming a market capitalization of EUR 23.27B and a share price of EUR 2.33).

Secondly, the share buyback program can potentially improve Nokia's return on equity (ROE). ROE is calculated as net income divided by shareholder's equity. A lower share count can lead to a higher ROE, assuming net income remains constant.

Thirdly, the share buyback program can potentially increase Nokia's market capitalization per share, as the number of outstanding shares decreases. This can make Nokia's shares more attractive to investors, potentially leading to an increase in the share price.

Lastly, by returning cash to shareholders through the share buyback program, Nokia can potentially increase shareholder value. This is because shareholders benefit from the increase in EPS, potential improvement in ROE, and the potential increase in the share price.

Nokia's share buyback program is expected to have a positive impact on the company's future financial performance by increasing EPS, potentially improving ROE, and potentially increasing shareholder value. However, the actual impact will depend on various factors, such as the company's future net income, share price, and market conditions.



In conclusion, Nokia's share buyback program is a strategic move aimed at offsetting the dilutive effect of the Infinera acquisition and enhancing shareholder value. By repurchasing and cancelling its own shares, Nokia is expected to increase EPS, potentially improve ROE, and potentially increase shareholder value. The actual impact of the program will depend on various factors, such as the company's future net income, share price, and market conditions.