Analyst Note| Mark Cash |
No-moat Nokia’s December 2020 strategic update was a precursor to its capital markets day planned for March 18, 2021. Management laid out six strategic beliefs: Networks are becoming more critical for communication service providers but increasingly for enterprises too; customers will look to best-of-breed elements; technology leadership drives returns and growth; Nokia will jettison efforts if not leading; silicon, software, and service will take over monolithic system demand; and commitment to innovation provides long-term opportunity. The primary capital-allocation priority is research and development to capture the 5G opportunity; the next imperative is shareholder returns. The previously guided outlook for group-level results in 2020 and 2021 hasn't changed, and we are maintaining our EUR 3.80 fair value estimate.