Good morning, ladies and gentlemen and welcome to Nokia's fourth quarter 2021 results call. I'm David Mulholland, Head of Nokia Investor Relations. And today with me is Pekka Lundmark, our President and CEO; along with Marco Wirén, our CFO. Before we get started a quick disclaimer. During this call, we will be making forward-looking statements regarding our future business and financial performance and these statements are predictions that involve risks and uncertainties. Actual results may therefore differ materially from the results we currently expect. Factors that could cause such differences can be both external as well as internal operating factors. We have identified such risks in the risk factor section of our Annual Report on Form 20-F which is available on our Investor Relations website. Within today's presentation, references to growth rates will mostly be on a constant-currency growth rate basis and margins will be on our comparable reporting. Please note that our Q4 report and this presentation are published on our website. And both reported and comparable results and reconciliation between the two are available there. In terms of the agenda for today, Pekka will give a quick overview of our financial and strategic progress throughout 2021. Before explaining the new long-term targets that we've introduced. Marco will then go into a bit more detail of some of the key factors impacting our financial and cash flow performance before explaining how we see the business outlook for 2022. And then we'll go to Q&A. With that, let me hand over to Pekka.

Thank you very much, David. Hello, everyone. And thank you for joining the call today. Q4 ended a year, which was truly transformational for Nokia, in many ways. I would like to start with growth. As you remember, we have said throughout the year that this year would be different in terms of seasonality. And that's exactly what happened. We had 3% top-line growth overall in the year EUR 22.2 billion sales. Q4 pretty much as expected was 5% down year-on-year EUR 6.4 billion, because we had this year in a way much more balanced seasonality compared to where we have typically been. Q4 top-line highlight was clearly network infrastructure 10% of growth. So overall, good year from top-line point of view. Pretty much as expected when it comes to seasonality. So now let's look at operating margin. We had a strong Q4, 14.2% comparable operating margin. But again, because we had more stable seasonality this year, it was 190 basis points lower than the extremely high and strong Q4 that we had last year. But overall for the full-year 12.5% comparable operating margin, it's a 300 basis points improvement over 2020. I'm extremely happy and proud of this achievement that our team has delivered. Why do I say that it was a transformational year? Well, this graph helps me to explain that here you see. First of all, net sales constant currency growth each quarter this was 2020 growth in each quarter. And here you can see the corresponding growth in 2021. Very different picture between those two years. But yes, different seasonality Q4 being relatively weaker as expected. And then here you see the significant margin improvement that we delivered here is 12 month rolling comparable operating margin starting from Q1 2020. And then developing all the way…

And thank you, Pekka for the presentations. Before we move to the Q&A session, I just wanted to give you all a date for your diaries, I'm following on from the Mobile Networks progress update that we did back in December. Our next event for progress updates will be on our Network Infrastructure business. And that session will be held on Thursday, the 17th of March. We'll send the details out to you shortly. With that over to the Q&A. As a courtesy to others in the queue, could you please limit yourself to one question? Rachel, could you please give the instructions.

Thank you. We will now begin the question-and-answer session. If you were also watching the video webcast, please remember to mute the audio on your computer before asking your question as there is a 30 second delay. [Operator Instructions]. I will now hand the call back to Mr. David Mulholland.

Sure. Our first question comes from Andrew Gardiner of Citi. Andrew, please go ahead.

Thank you, David. Good morning, guys. Appreciate you taking the question. I had one on the sort of revised long-term margin target, please. You spoke Pekka about the phases of the strategy, you've just completed the reset phase and then now embarking on accelerate and scale. Under the reset phase, you'd already shown nicely expanding margins, 1.5 percentage points on an underlying basis last year, excluding those one-offs. And you're calling for a similar kind of expansion 1 to 1.5 percentage points this year. But if you're now moving into the accelerate phase, and like you described focusing on growth, both at the top and the bottom-line, why is it going to take longer to expand margins to the north of 14%, than it has been during the reset phase? Thank you.

Yes, thank you. That's, of course, a highly relevant question. We have a stronger technology position now than we had a year, year and a half ago. The market continues strong carrier CapEx plans, at least what we have seen now in North America for this year, for example. They all look strong. Then there also continuous uncertainties in the component side, inflation, uncertainties. We just simply don't want to get ahead of ourselves. We want to ensure that that we have continuous improvement year-over-year and we felt that if we take the underlying profitability of 11%, excluding the one-offs last year. We felt that 14% this is the right level for the three to five year target. Of course, three to five years is a fairly wide range. We do see improvement potential in mobile networks, in network infrastructure, in cloud network services. And I was talking about the levers that we see supporting the growth and margin expansion and business in those businesses earlier.

Thank you, Andrew. Our next question will come from Simon Leopold from Raymond James. Simon, please go ahead.

Thanks for taking the question. You didn't talk too much about supply chain constraints, which I'm interpreting as probably good news. But if you could update us, because you certainly did indicate that there were some headwinds. So I'd like to get an update in terms of some quantification of what the impact was, in terms of the quarter. How it's evolved over the last 90 days. And what are you assuming in terms of improvement in any supply chain constraints for your 2022 outlook? Thank you.

Yes, thanks. If my memory serves me, right. I said in - was it in Q3 report. I'm not 100%. But somewhere I said that, that it could get worse before it gets better. And now, we did not say that. But it would - it does not mean that that the situation would be over, it has stabilized. That is fair to say. But it continues tight, there are still going to be at least in the first half of this year, situations where people live more or less hand to mouth. We had 3% top-line growth last year. That growth could have been a bit higher. Had there been more component semiconductors especially available. So there was a revenue shift from especially the second half of the year, including Q4 to 2022. And again, we are not out of the woods yet. We have managed this very challenging situation very well without any major casualties or any major customer losses, but situation continuous and calls for continuous day-to-day management. Then, when it comes to the economic impact of this in 2022 numbers. We have, of course incorporated that in our guidance. And that is one of the reasons why as you could see the 2.5 percentage point guidance range is still quite wide at this time.

Thank you, Simon. The next question comes from Frank Maao at DNB.

Yes, hi, and good morning, everyone. So my question pertains to the cloud and network services business. What are the main challenges you see there with regards to margin progress, both in 2022, but also longer-term. Do you see potentially contributing positively being accretive or diluting potential so, to the long-term group margin? How do you see it longer-term? Thank you.

Well, the cloud and network services being more software centric than the other businesses. Of course, that means that that if and hopefully when, when we get the volumes up really up in the new focus segments, there should be a lot of additional margin potential yet. Right now, we are still doing a lot of portfolio cleaning, there are a lot of old products that are getting to the end of their economic life. There also some non-performing units, non-performing products that we are cleaning up. And then we are increasing our focus and investment in the focus areas that I was talking about. And I believe that that has a possibility to deliver good growth going forward. On top of all this, and I did talk about campus wireless, also quite a lot. And then there is this strategic structural development that would start taking speed gradually, which is the development with various asset service models where you actually want to offer certain functionalities, for example, in network security, network quality management and anomaly detection as a service. These are some of the initial services that we have just recently launched. And then one thing that I also talked about already last time, I think is this evolution of open interfaces, where you want to hide enormous network complexity from developers and offer a simple set of API's through which networking functionality, for example, industrial vertical applications can be offered to users and that way engaging the developer community in a much more simple and straightforward way than what has traditionally been the case in this type of networking applications and communications networks in general.

Thank you, Frank. We'll now take the next question from Alex Duval at Goldman Sachs.

Thanks for question. Had a quick one on the U.S. market in wireless and Nokia's position there. I wondered, firstly, if you could talk a bit about what you see in terms of market demand, both this year and next year for that particular market on the wireless side? And secondly, related to that there obviously been some historic share losses. I wonder to what extent you feel given what you're saying today about an improved wireless offering that you could potentially regain some share, and how much progress we could expect from that? Many thanks.

Of course, it goes without saying that, that the 16% decline in net sales of mobile networks in the quarter is not a good achievement. But the point here is that it that this is something that we had been trying to say throughout the year that the session I lead would be different. And this again, this go back to decisions that the customers made earlier in the year 2020. Now, the good news is that that after those decisions in typically mid around mid-2020. We have not lost any more market share. In North America, we have - had some smaller wins with some smaller operators. We of course, then also secured a five year 5G deal with both T-Mobile and AT&T. So in the big picture, I would put it this way that that we have now established a new baseline for our North American business. And that's not the bad baseline. In - on top of the mobile network position, we have strong position in network infrastructure and cloud network services, which were quite a lot actually able to compensate for what mobile networks lost in Q4 in North America. Now listening to the CapEx plans of the key customers in America that is of course a reason for optimization. We see continued strong market demand there and now very importantly, when we have a completely different product competitiveness than we had a year or two, even two years ago. We have every reason to be hopeful and optimistic and I don't think that when we are talking about targets to in general not only in North America, but in general to now start to go after increasing market share. I do not see that. That's an unrealistic target.

Thank you, Alex. We'll now take our next question from Peter Nielson at ABG. Peter, please go ahead.

Thank you very much, David. Good morning, gentlemen. Can I just follow-up on that Pekka, please and preceding question. The margin guidance you've given for mobile networks is a fairly broad one. Could you discuss a little bit what would be the determining factors, whether you end up at the lower bit upper end of the range? Is it primarily a question of top-line leverage? Thank you very much.

Yes, if you - I mean, top-line leverage is of course extremely important in mobile networks. But there is also the gross margin expansion that we saw in the year. We had 7.9%, comparable operating margin in 2021. And if you take away some of the effects of the one-offs, 7% roughly would be a good comparable via starting point for this year. And we are saying that our assumption is between 6.5% to 9.5%. And of course, we have incorporated into this everything. We are seeing on the market on the positive side, stronger product position, demand that continues strong, then on the other side of the equation, inflationary development that we are playing all this against each other. You may call it bald. That's, of course your call. But we are just trying to give you as realistic and as honest and as transparent picture as to where we believe that this year would land.

Thank you, Peter. We'll take the next question from Francois Bouvignies from UBS. Francois, please go ahead.

Hi, thank you very much. My question is regarding the top-line for 2020. So if you look at your guidance, and I just did focused on currency. You're barely growing in your top-line in 2022. If my math is correct, and you showed some addressable market going 3% at constant currency. If we look at your comments, a strong backlog, a positive momentum in operators CapEx, which is well above I mean 3% with no market share loss. Europe, you're gaining some market share, because of the swap out. So, I'm trying to reconcile, all these comments and the market dynamic with your guidance for the top-line. Is there anything we should be aware that would justify your lower growth and market growth? Just trying to understand if I'm missing something? Thank you. Marco Wirén: Yes, thank you so much. As we stated that we believe that market in general withdraw about 3%. And there's a little bit differences in mobile networks market, which is 3% growth. And as I said, this is pretty much according to same principle and the same levels as Dell'Oro. If you look the same perimeter and the same currency. So currencies play a big role here also and in network infrastructure, the market is growing about 3% as worldwide. CNS, we see about 5% growth. And if you look our guidance today would be half of this year, it is going from EUR 22.2 billion to EUR 22.6 billion to EUR 23.8 billion. So I would say that, that we are - our ambition is to grow faster than market and this is something that we are definitely working on.

Thank you, Francois. We'll now take the next question from Artem Beletski at SEB. Artem, please go ahead.

Yes, hi. And thank you for taking my question. I would like to pick your thoughts, what comes to inflation situation and what type of impacts you're basically baking in what comes to your top-line guidance for this year, so could you maybe comment about the pricing picture what comes to products and services for this year compared to say normal years, what you have seen previously.

Marco may have a general inflation comment and related to guidance, but I just say maybe one thought in the beginning that of course, the inflation and development is pretty much new to our industry component. Costs are increasing and of course, it goes without saying that in all new contracts that we make with our customers, we take all this into account. It is of course much more straightforward in new contracts than in existing contracts. That of course goes without saying, but we are basically mitigating the inflationary effects both with our suppliers and customers pretty much every day. Marco Wirén: Yes, and just building what Pekka said, I would say that if you look our guidance at the interval that we have given us, well, that depends quite a lot about how the inflation is working but also market demand itself and also the supply chain situation. And these all together of course with our own performances is depending factor where we land in those intervals.

Thank you, Artem. We'll now take the next question from Alek Peterc from Societe Generale. Alex, please go ahead.

Yes, good morning and thank you for taking my question. I just like to understand again pertaining to your long-term guidance, we had a pretty good track records in recent periods of landing at the higher end of your guidance range. So in a hypothetical situation where your '22 clean, comparable operating margin lands towards the higher end of your 11% to 13.5% range, would you then say that your 14% plus three to five year target will look too conservative, either in scale or in terms of timing? Thanks.

Well, without getting into too much speculation on this, I guess everybody understands that the higher on this year's range we would land this year, the more likely it is that we would achieve the 14% target earlier. But more than that, I would not like to speculate, I will target this continuous improvement in all our businesses. And as I said in my presentation, we believe that when we look at Mobile Networks, Network Infrastructure, CNS, we are in a good position to continuously improve in all those businesses. And hopefully we would reach that 14% as quickly as possible.

Thank you, Alex. We'll take the next question from Rob Sanders from Deutsche Bank. Rob, please go ahead.

Yes, hi. Good morning. I just had a question on RAN share, your 4G, 5G share ex-China, I think fell to 26% in 2021, I was just wondering in which regions, do you think there is the best opportunity to get back to 30%, which I think under the previous management was a target? Thanks.

Well, we have not published a particular target. We of course note that the market share has now stabilized and our target is to increase it from 26%. But we have not given as to how far we would like it to go and how quickly. I would say that there is potential in all markets, there are several markets in the world who haven't actually yet even started 5G, Latin America is very early stage still, India has not even started. So there's still yet a lot of business, business to gain in many parts of the world. But I would not like to highlight specifically any particular regions where the margin share gain possibility would be highest.

Thank you, Rob. We'll now take the next question from Sami Sarkamies from Nordea Markets. Sami, please go ahead.

Thanks, I would still like to go back to the free cash flow guidance that is looking surprisingly weak, as you're indicating a bit more than EUR 1 billion of free cash flow this year. That's about half the level of last year. Could you still please explain why this looking like a difficult year for you thinking of free cash flow generation?

Yes, thank you, Sami. We had an exceptional cash flow generation in 2021 and we might have a big swings in a cash flow, just like we saw in '21 and many of those payments that we received towards the end of year could have actually rolled over to '22. And that's why I also mentioned that if you look these two years together, we are in a very good position when it comes to free cash flow generation. We believe that this year, we will have little more build-up of networking capital. Two main reasons one is of course, the inventory. We believe that we could increase our inventories a little bit on areas where we believe are important and secure that we can supply and deliver those commitments to our customers that we have. And the other one is that we believe that we will have increasing trade receivables as well. But if you look the trend and over time and a longer-term as well, we believe that we will have a good cash flow generation.

Thank you, Sami. We'll now take the next question from Sandeep Deshpande from JPMorgan. Sandeep, please go ahead.

Yes, hi. Thanks for letting me in. My question is I mean, when we look at where the margin of your competitor, who has restructured for many years is today and looked at your long-term 14% plus guidance, the 14% plus guidance looks - doesn't look very aggressive at this point, given where they have been able to take their margins to, why does Nokia not think that they can also reach that sort of margin in the wireless networks business unless of course, your view on the market share is different?

Yes, thank you, Sandeep. I mean it is a fact that, of course, the business portfolios are different, different between different actors. And we have businesses that some other companies do not have. But if we talk specifically about Mobile Networks, it is of course a business, which has very high R&D investment. And that automatically means that volume and top-line is extremely important and going forward, just for the sake of argument, if we had similar top-line and similar geographic, geographical mix as probably the competitor you are referring to, I see no reason why we would not have similar margins, this goes back to the product, fundamental product competitiveness, which now starts to be in a pretty good shape. And that's why this next step in our strategy, which is called Accelerate and then scale is so enormously important. Now fortunately in our case, we have other businesses, which are very good in terms of margin. And when we look at this year's target 11% to 13.5% compared to where we believe that we would be just a couple of years ago, I think that's good development. But again we are now focusing on that 14% and hopefully we will get there as soon as possible. It's very much a volume game from now on in Mobile Networks.

Thank you, Sandeep. We'll now take our next question from Richard Kramer from Arete. Richard, please go ahead.

Thanks very much, many of your competitors are also targeting this enterprise space, Pekka. And talking about exposing API's and hopes of getting some development of 5G network applications. And you mentioned the order growth. But can you talk a little bit more about two specific things, one your go to market and the costs of that and the sales cycle? But also long-term, do you expect enterprise to be higher margin than your current carrier business? Thanks very much.

Yes, the go to market obviously, if you want to reach those 14 million industrial composites that I was talking about, it has to be fundamentally different. And that's what we are building at the moment, you need a strong partner network, you need system integration partners, you need partnerships with different types of cloud service providers, Webscalars, and so on and so on. There is I mean, from cost point of view, it would be a hopeless case to try to scale your own Salesforce to reach to 14 million industrial composites then of course, on the product side, also, you need to make sure that your product is as scalable as packagable as possible. And that's why the general development towards APIs and creating a platform for developers and offering the whole thing as a service as the business is evolving to that's really, really important. And to your second question, yes. Once we increase the annual recurring revenue as a service business model, absolutely, that model has a higher margin potential going forward. But of course, that will be evolutionary development over the coming years.

Thank you, Richard. We'll now take our last question from Fredrik Lithell from Handelsbanken. Fredrik, please go ahead.

Thank you very much. Thank you for taking my question. I would like to tap your brain a little bit on Enterprise 5G again, and maybe [indiscernible] the wrong market aspect of Enterprise 5G for the coming years and if you could for us sort of frame a little bit, what the potential in terms of RAN market growth is coming from sort of new segments if you'd like fixed wireless access. I mean, we've been talking about FWA for several years, but it's still to show in how it contributes to RAN or to Mobile Networks revenue generation coming here. So could you sort of talk a little bit about the potential when it comes to Enterprise 5G and how that sort of trickles down into their own market value, if you like? Thank you.

We are first of all strong believers in the potential of the Enterprise and compass wireless, it's a market that we have noted that is extremely hard to estimate on a date that level that how fast that growth will be, because it could swing a lot between the extremes, the only thing that is certain that it will grow substantially faster than the carrier RAN market, it starts from a low level. So we will certainly see years where the market can grow at least 30%, 35%, if not more, while the carrier market, most likely over time is in the low single digits. You mentioned Fixed Wireless Access, that is actually a market that now driven by the new 5G based systems is driving a lot of growth. And that is in addition to passive optical networks is one key reason why our fixed networks business is growing so fast. Remember, in our model, Fixed Wireless Access is in Network Infrastructure, in Fixed Networks business, it's not in Mobile Networks, even though technically, of course, we are delivering radios there. So we are bullish about the market potential. But unfortunately, I mean I'm not able to and I don't think anyone is able to detail that how much exactly the growth will be over the coming years.

Thank you, Fredrik. Ladies and gentlemen, this concludes today's call. If you have any outstanding questions, please do feel free to reach out to the Investor Relations team. I'd like to remind you that during the call today, we've made a number of forward-looking statements that involve risks and uncertainties. Actual results may therefore differ materially from the results currently expected. Factors that could cause such differences can be both external as well as internal operating factors. We have identified such risks in the Risk Factors section of our Annual Report on Form 20-F which is available on our Investor Relations website. With that, thank you very much.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.