Good morning, ladies and gentlemen. Welcome to Nokia's Fourth Quarter 2023 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 Wiren, 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 Factors 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 where we refer to margins, it will be based on our comparable reporting. Please note that our Q4 report and a presentation that accompanies this call are published on our website. The report includes both reported and comparable financial results and a reconciliation between the two. With that complete, in terms of the agenda for today, Pekka will give an overview of the quarter, and then Marco will go into a bit more detail on some of the key factors impacting our financial performance before Pekka gives a brief conclusion when we move to Q&A. With that, let me hand over to Pekka.

Thank you, David, and thank you to everyone for joining us today. So, let me start with an update on some of the strategic and operational changes we announced with our Q3 results in October. We are evolving our operational model to give our business groups increased autonomy and have now embedded our sales teams into the business groups. This announcement has been well received by our customers. We have hit the ground running in 2024 to embed sales teams into the business groups that happened at the start of the year. We have appointed customer account executives and the country manager role has also been reinforced. The customer account executives are there to ensure that we still offer one point of contact and a person responsible for overall relationship management with customers without detracting from the accountability of the business groups. Some corporate functions have also moved to the business groups as we move to a leaner corporate center. During the first half of 2024, we will begin reporting business group regional sales and cash flow metrics to further enhance transparency. And we already commenced the process of resetting our cost base during 2023. We expect this program will generate EUR 400 million of gross savings during 2024. If we then turn to Q4 and 2023 full year, we saw a meaningful shift in customer behavior impacting our industry. This was driven by the macroeconomic environment and high interest rates, along with customer inventory digestion, especially in North America. This led to our fourth quarter sales declined by 21%, and full year sales declined by 8% in constant currency. Proactive action across our organization meant we were able to protect our profitability while continuing to invest in R&D, and we delivered a comparable operating margin of 14.8% in Q4 and 10.7% for the full year. This was a resilient performance considering the challenging environment and lower contribution from our high-margin patent licensing business, as some renewals remained outstanding. We were pleased with our cash performance in the quarter where we generated €1.7 billion of free cash flow, and we ended the year with a net cash balance of €4.3 billion. Positively, we also ended the year with improving order intake. Our fourth quarter book-to-bill was above one, particularly supported by our network infrastructure business, indicating at least some improvement in the overall spending environment. Moving on to Network Infrastructure, sales declined by 24% in constant currency versus the year-ago quarter, which had been particularly strong. For the full year, sales declined by 9%, mainly driven by IP and Fixed Networks, optical networks grew by 5% and ASM declined slightly. There was a favorable development in gross margin, which improved by 60 basis points versus the year ago quarter and by 130 basis points for the full year, driven by positive product mix. Operating margin in the quarter decreased to 13.9% due to the impact of lower sales. For the year, our operating margin ended up at 13.1%, which was comfortably within the range we had shared at the beginning of the year and above the targets we had set for ourselves back in 2021. As you remember, we had Capital Markets Day back then where we set the targets for each of the business in 2023. Also, if I can give you a quick update on the profitability of each of the units within NI for the full year in 2023, IP Networks saw its profitability decline slightly due to the weaker sales coverage but remains mid to high-teens operating margin. Optical networks improved strongly, benefiting from the sales growth to deliver a high single-digit operating margin. For fixed networks, despite the sales decline, product mix was beneficial and delivered high-teens operating margin. And finally, submarine networks remained low single-digit but did improve slightly year-over-year. Mobile Networks Q4 saw the continued impact of normalization of India rollout and the dual impact of inventory digestion and macroeconomic pressure spending in North America. We were, however, pleased to see a robust gross margin performance supported by favorable regional and product mix in Q4. Similarly, operating margin for the quarter was 11.5%, an improvement of 470 basis points versus the year-ago quarter, driven by gross margin and lower variable pay accruals. For the full year, in spite of top-line challenges, operating margin was 7.4%, which was within our stated planning assumption for the year and at the higher end of our targets we set back in 2021. Finally, on Mobile Networks, AT&T's recent announcement to move to a largely single-source radio network was, of course, a disappointing development. As we said at our investor event in December and as confirmed by AT&T, this does not reflect the technological competitiveness that we have achieved with our products. This has been evidenced by our significant increase in market share in recent years. I firmly believe Mobile Networks has the right strategy in place to create value for our shareholders in the future with opportunities to gain share, diversify our business, and achieve a double-digit operating margin longer term. CNS sales declined in Q4 by 5%, driven by declines in all businesses with the exception of business applications, which grew. Gross margin improved, and this flowed through to operating margin, which improved from 5.3% to 7.9%. The 7.9% operating margin we delivered is at the higher end of what we targeted at the start of the year. It is slightly below the lower end of what we had set as target back in 2021. This is due to the increased investments we decided to make in private wireless, which has been consistently delivering double-digit growth. 2023 did see us make progress in our portfolio rebalancing efforts with the divestment of VitalQIP, the announced sale of our device management and service management platforms businesses in December, and the partnership we announced with Red Hat on cloud infrastructure. We also led the industry trend towards programmable networks with the launch of our network as code platform, which now has nine commercial agreements. Nokia Technologies' net sales decreased 63% on both the reported and constant currency basis in the fourth quarter, as the year-ago quarter had a €305 million one-off non-cash benefit we explained at the time. Excluding this, the year-on-year net sales performance primarily reflected lower net sales from a license that expired at the end of the third quarter of 2023. The financial performance in 2023 was, of course, not what we had hoped for as some deals took longer to renew than we had expected. There were still some very important achievements. We signed long-term renewals with both Apple and Samsung, along with signing a new agreement with Honor. Positively, as we announced yesterday, we have now achieved a renewal with Oppo and we are very close to concluding another agreement in China. With these agreements, we are now in the final stages of our smartphone license renewal cycle with only the recently expired major agreement outstanding. This provides long-term stability to our Nokia Technologies business, which can now increasingly focus on growing our licensing run rate in the new growth areas including automotive, consumer electronics, IoT, and multimedia. I remain confident that with growth in these areas, we can return to an annual net sales run rate of €1.4 billion to €1.5 billion in Nokia Technologies in the mid-term. Enterprise net sales decreased 3% in constant currency in Q4 in comparison to a very strong year-ago quarter. However, for the full year, we grew 16%, which shows strong continued momentum. Overall, customer engagement also remains strong as we added 151 new enterprise customers in the quarter. Private wireless continued to show strong growth in 2023 and now has more than 710 customers. You can also see on the right-hand side of this slide a breakdown of the €2.3 billion of enterprise sales we had in 2023. We wanted to give a bit more color around the components of our enterprise business. Almost half of our enterprise sales come from areas where we sell our NI products into targeted enterprise verticals, particularly those that value mission-critical networks. Private wireless is now just over one-quarter of our enterprise sales, having grown strongly for several years, and then web scale is an increasingly important opportunity for us as well. Now I will hand over to Marco to go through the financials in more detail.

Thank you, Pekka, and good morning, good afternoon from my side as well. And let's start by looking at the regional performance of the businesses. In quarter four, all regions declined, and we saw growth in the Middle East and Africa. Most notably, North America declined once again and reflected the inventory digestion and macro uncertainty, which has been dominating most of the year. India declined by 30%, and this was related to the 5G deployments that continue to normalize. In Europe, we saw a meaningful decline in the quarter, some of which was driven by Nokia Technologies, which is entirely reported in the Europe numbers. Otherwise, the decline was mainly driven by Mobile Networks and Network Infrastructure. Looking at the operating profit in the quarter, Pekka explained a number of these drivers already, but a few things that I want to point out are common contributions, which were better than the year-ago quarter, driven by venture fund where the performance improved. In Mobile Networks and Cloud and Network Services, they improved somewhat year-on-year. However, the majority of the decline was driven by Nokia Technologies, with the year-ago quarter benefiting from the €305 million one-off that Pekka mentioned. Moving to our cash position in quarter four, we had a strong quarter and ended the year with €4.3 billion of net cash, an increase of €1.3 billion compared to quarter three. This is mainly reflected by strong quarter four profits and a significant inflow of cash related to net working capital. This was due to both lower inventories as well as receivables, which benefited from a partial prepayment of a licensing agreement that was made in 2023. During quarter four, we returned over €200 million to shareholders through dividends and the completion of the second tranche of our two-year €600 million share buyback program. In the full year 2023, we returned over €900 million to shareholders through dividends and share buybacks. Free cash flow for the full year was just over €800 million, and this is a 34% conversion compared to operating profit, which was in line with our guidance of 20% to 50% for the year. Turning to our 2024 cash flow outlook, we try to provide a view here on the moving parts in the 30% to 60% free cash flow conversion from comparable operating profit that we have guided for. We do expect to see a positive impact from our operational and net working capital in 2024 as we continue to see some reduction from the build-up we saw during the past two years. We expect cash taxes to be about €500 million in 2024. We also assume cash flow related to restructuring of about €550 million. Although, I would note that we also target to achieve the €500 million in-year cost savings in 2024, which relates both to the program we just launched, but also the final savings of our prior 2021 program. Finally, regarding Nokia Technologies, we expect cash generation to be approximately €700 million below operating profit, and this is due to prepayments that we received in 2023. From 2025 and onwards, we expect greater alignment between Nokia Technologies, cash generation, and operating profit. So taking these into consideration, we should land in the 30% to 60% conversion rate. As we look out to 2026, you can see that we are well on track to reach our target of 55% to 85% conversion, especially as mega technologies' cash generation starts to align more with its operating profit. At the end of 2023, our net cash represented about 19% of our net sales, which is above the target of 10% to 15% that we laid out at the beginning of the year. Given this strong cash position, the Board of Directors will propose an increase in our dividend to €0.13 per share. The Board is also proposing to initiate a new buyback program of €600 million over two years. Given the ongoing macroeconomic uncertainty and industry challenges, we feel it is prudent to take a measured approach to getting to the 10% to 15% net cash target. If we now look at 2024, you can see in the presentation on the release, the planning assumptions we have for our business groups in 2024. These are well aligned with the commentary we provided back in December. I will not go into detail on each number, but you will note that we provide a net sales assumption by business group instead of the targeted addressable market assumptions we have provided in the past, which we hope gives greater transparency. Piecing all of these assumptions together, you can understand our full-year outlook for 2024. We are now guiding for comparable operating profit between €2.3 billion and €2.9 billion, which takes into consideration all the BG assumptions. We also expect the free cash flow conversion to be between 30% and 60% for the reasons I talked through earlier. One further planning assumption we have provided that I would like to highlight is around the seasonality that we expect in 2024. We expect Q1 net sales in our network businesses to show a largely normal seasonal decline sequencing. Since 2016, the average Q1 sequential decline in sales has been 23%. We expect significant seasonality in profit generation in 2024, with lower sales coverage to weigh on operating profit in quarter one, especially in MN and CNS. The company then expects progressive improvement in these businesses throughout the year. I also want to draw your attention to some changes that we will be making to disclosures and accounting for 2024. These changes are being made to enhance transparency and further support understanding of the financials of our business goals. First, by quarter two at the latest, we will start disclosing regional sales and cash flow metrics by business growth, which will help provide a more complete picture of the individual parts of the business. Secondly, we will change the way we account for the impact of our venture funds. Historically, they have been recorded in other operating income and expense and included in our operating profit. Going forward, we will report this in financial income and expenses, which we believe makes sense given the volatility of these valuations in recent years. With that, back to you, Pekka, for some final thoughts before Q&A.

Thanks, Marco. Just very quickly, before we turn to Q&A, let me conclude with a couple of remarks. First of all, as already discussed, we faced a highly challenging environment in 2023, but considering the 8% decline in net sales, I believe we delivered a resilient financial performance. Our business group did a good job maintaining profitability and still delivering on operating margin targets, as we said at the start of the year. We also delivered a solid cash performance in line with the guidance we provided at the start of the year. This is enabling the Board to propose an increase in our shareholder distributions for the coming year. Secondly, we are moving quickly on our cost reduction program. More importantly, we continue to take steps to increase the operational autonomy of our business groups. We want to make sure they are empowered to make the right decisions to create shareholder value in the future. Finally, while the environment will remain challenging in the first half of 2024, the strong order intake we saw in Q4 points to some improvement in the spending environment, especially for Network Infrastructure. We are also in the final stages of our smartphone license renewal cycle in Nokia Technologies. This will lead to greater stability in Nokia Technologies going forward and will allow the business to focus more on its growth areas. With that, I will hand back to David for the Q&A.

Thank you, Pekka and Marco, for the presentations. Alice, could you please give the instructions?

We will now begin the question-and-answer session. I will now hand the call back to Mr. David Mulholland.

Thanks, Alice. We'll take our first question from Jakob Bluestone from BNP Paribas Exane. Jakob, please go ahead.

Thanks, David. Hi, good morning. I was hoping you could maybe expand a little bit on the green shoots commentary. Specifically, what do you think is driving the sort of improvement coming through? And maybe if you could just comment a little bit whether you're seeing any green shoots in Mobile Networks or if it's just on the Network Infrastructure side? Thank you.

Yes. Thank you. The comment on green shoots was clearly more on the NI side. The good thing now is that, as you know, we have the four businesses in NI, we had strong order intake in Q4 in all four business divisions of NI. In IP Networks, it's driven by tailwinds in webscale and enterprise contracts. In Fixed Networks, it's driven by government funding, which starts to benefit the market already now in order intake, but because of the delivery cycle, in terms of sales and top line, mostly in the second half of 2024. In Optical Networks, it's simply share gains because of our strong product momentum and the excellent feedback we are receiving from customers regarding our recent product announcements. In Submarine Networks, we already had a strong order book in the beginning of the quarter, but we had great order intake in Q4 as well, and that combination is now going to be driving the outlook for that business going forward.

Did you have a follow-up, Jakob?

Maybe just on the Mobile Networks. What are you seeing there? It sounds like it's still pretty tough?

Yes. The market will remain tough at least for the first half of the year. When you look at the Mobile Networks sales guidance for this year, remember that a significant part of that is driven by India. Our group sales in India were €1.3 billion in 2022 and last year, €2.8 billion. Now we expect that 2024 group level would be somewhere between €1.5 billion and €2 billion, and most of that decline that we will see in India this year will be in Mobile Networks. That already explains a significant part of the drop. Overall, we are still expecting or waiting for mobile operators throughout the world to start investing because investments have been very low. 2023 was a tough year for the whole market, most pronounced in North America. The fact still remains that only about 25% of base stations outside of China are 5G midband, and a small majority of all core networks have been upgraded to 5G advanced. Those investments will need to come because, without that, operators will not be able to monetize 5G properly. Right now, interest rates are still high, and many operators have high leverage. The good thing would be if interest rates would come down, as data traffic continues to grow 20% to 30% per year. Gradually, that will start to force operators to invest again; however, the reality is that nobody knows when that will come. I'm absolutely convinced that it will come, but we are not seeing concrete signs of it yet.

Thank you, Jakob. We'll take our next question from Simon Leopold from Raymond James. Simon, please go ahead.

Great. I wanted to see if you could help us in terms of how the AT&T transition with the ORAN project is affecting your revenue assumptions? And what I'm trying to tease out here is whether there is a step-down rapid decline, or maybe a long tail of spending before a slowdown. I would like a little bit of color on how we should think about that revenue impact in 2024? Thank you.

Okay. Just as a reminder, we said that AT&T represented last year 5% to 8% of sales in Mobile Networks. This is important to keep in mind that the 2023 number was significantly lower than in 2021 or 2022. So we had already seen a significant decline in AT&T volumes because of their lower investments. Now we have an existing contract with a five-year agreement with AT&T that was published at the beginning of 2021. Negotiations are still ongoing regarding how we execute on this contract, and before we have concluded those negotiations, it is hard to give a clear answer regarding the trajectory of the decline. However, we do expect our sales to AT&T to drop this year. We have to remember, though, that when we look at Mobile Networks, we will continue to supply microwave radios and femto products to AT&T. Outside of mobile networks, we continue to remain a key supplier in both Network Infrastructure and CNS. Those two businesses do not have anything to do with the radio network decision that AT&T made.

Did you have a follow-up?

Yes. And as a follow-up, the forecasting this quarter in terms of the planning, we don't have a revenue outlook, but there is the operating income outlook, and I imagine that, that is what's really important to folks. I assume there is an underlying revenue assumption. You would have given it to us if you wanted to, and you've chosen not to. Help us understand the thinking and the puts and takes on what assumptions you've made for full year 2024 revenue and the choice to guide the way you have? Thank you.

Yes, absolutely. Thank you. As you see, we changed a little bit how we are guiding for this year. We decided to give more flavor and information about our assumptions for business growth. We believe that this will be more helpful for you to get a better picture of each of the businesses, which then combine for the whole company. At the group level, we guide on the operating profit and free cash flow. You can see that we have net sales and operating margin assumptions by business group. For the technologies, we have also given you the operating profit assumption for this year. The seasonality we have given you provides a good understanding of how the year will play out. The seasonality will be more back to normal than we've seen in some years ago – heavy second half with Q1 typically about 23% lower than quarter four the year before. I hope that the more detailed assumptions in the guidance will give you a better understanding of how the company is doing and the different areas and businesses.

Maybe as a quick follow-up, just to put things in perspective in terms of seasonality. When we say that we are returning to a more normal seasonality, we mean there were two main reasons for that abnormality in 2023. In Mobile Networks, significant deliveries in India in the first half of the year distorted the seasonality. The same happened in NI for different reasons; the beginning of the year was extremely strong due to supply chain shortages and extremely high orders that operators placed. That’s why both NI and MN had unusual seasonality in 2023, and both are expected to return to normal in '24.

Thanks, Simon. We'll take our next question from François Bouvignies from UBS. François, please go ahead.

Hi, thank you very much. Just wanted to ask you on the hyperscale wins and momentum. Pekka, you’ve seen in your remarks and in the release quite excited about the wins and the network infrastructure momentum. I wanted to ask you from the switching and routing, are you taking some market share there? Can you elaborate a bit on the hyperscale wins momentum? Is it related to AI? Just to understand a bit better the momentum, because when we look at Arista and Cisco, it doesn't seem they have a lot of momentum, so it's very specific to you, which would suggest you are gaining some market share. But then you said a bit earlier that the market share is more on the optical side, and it seems to be more market-driven on the other side of routing and fix. So just to elaborate would be great. That’s my first question. Thank you.

That's a highly relevant question. The NI business with hyperscalers has been fairly optical-driven, as I commented before. We have existing optical business with them that is looking pretty good. The main growth potential for us there is really in data center switching. I cannot disclose the name, but we had a significant order from one of the hyperscalers in Q4. We hope to be able to disclose the name in the not-too-distant future, but we cannot do it yet. This will be driving growth for the web-scale business in the IP networks side of NI going into 2024. We have to remember that, compared to our competitors, our switching business, the data center switching business is small. So we are a challenger, but the good side is we now have an increasingly strong product portfolio based on our in-house silicon, which is welcomed by hyperscalers, combined with a strong software offering that provides flexibility for different data center architectures. This gives us the possibility to gradually break into this market and achieve meaningful growth in the segment because, as we know, the CSP market is not a growth market overall. We are targeting share gains, but data centers will be the most significant growth market in the industry.

Yes, just a quick clarification on what you said, Pekka. The deal you signed that you can't disclose yet, I guess, it's a market share. I mean, I guess you are seeing a market share win, I would imagine, given your low footprint in this originally?

Yes, it is. It is a market share win, yes.

Okay. And just my follow-up question is on Open RAN. AT&T kind of surprised the market with this deal, and I was wondering if you see some acceleration in terms of activity of Open RAN from other operators following that deal. I mean, we are a few months now, a couple of months after this announcement. From what I understand, the other operators are looking closely at it. Do you expect other announcements from other operators this year of this kind, or do you really think it's just a one-off for now?

Open RAN is gradually gaining speed. I don't expect and I have not seen that the AT&T decision would have led to any kind of increase in Open RAN interest in other parts of the world. There are estimates that in 2028, O-RAN would represent roughly 25% or 24% of the total RAN market. That gives you a perspective. I really suggest that people need to follow up very closely on the facts about different rollouts, including all announced projects, how quickly they will be? Will it be true O-RAN, or will it be O-RAN where you have just the same supplier on both sides of the interface? We have two real commercial O-RAN deployments ongoing at the moment. One is with NTT DOCOMO in Japan, and the other one is the recently announced Deutsche Telekom project in Germany. We have connected our DU and CU to five suppliers' radio units, which is more than any other supplier. Gradually, O-RAN fronthaul and open fronthaul interface is becoming a commercial reality. It starts with simple radios and only gradually moves to massive MIMO, but it will eventually get there as well. It will be part of the market, a small part of the market for quite some time. I have said before that we see it more as an opportunity than a threat for Nokia.

Thanks, Francois. We'll take our next question from Sami Sarkamies from Danske Bank. Sami, please go ahead.

Hi, thanks for the comment. For Mobile Network of less than €9 billion this year with a low single-digit EBIT margin, just curious how will you be able to retain scale and grow revenues to €10 billion target that will be required for double-digit margins in the long run? If we look at the latest forecast from the likes of Delora, the five-year outlook for the RAN market looks quite flat even if you assume some share gains from Chinese rivals. Do you have anything else planned other than the cost program that was announced after third quarter results?

Of course, the cost program is an important element in this, but we also have to remember that perhaps with the exception of India, 2023 was really weak in terms of investment. When you look at the big picture, only 25% of 5G base stations are mid-band, suggesting that there will have to be significant investments in 5G radio networks in different parts of the world before 6G starts to come in. Data traffic continues to grow 20% to 30% per year. In addition, the Chinese will be increasingly under pressure due to political reasons and actions by Western countries to limit their access to the latest silicon. It's clear that to get to €10 billion top line, we have to continue to take market share. AT&T is, of course, a setback. From there, we need to start climbing back up towards a market share that we need to start at three if we want to get to €10 billion top line. It is a challenge, absolutely, and that's why we have provided a fairly low guidance for this year's profitability, 1% to 4%, and then we commented on the 2026 target at the December event; we are not assuming we would get to double digit by 2026. We also need to keep in mind that when we talk about the second half of the decade, we will have significantly increased the non-CSP business part of Mobile Networks. We are already now growing, albeit from a low base in private wireless. A very important target for the second half of the decade is the defense industry, where spending is significant. It is currently mostly proprietary military technologies for communications. The challenge they face is getting extremely difficult to be cost-competitive when technologies are proprietary. Thus, it is getting extremely expensive. The defense industry in several parts of the world is looking at commercial technologies, such as 5G, to provide an alternative to proprietary military technologies. Actions that Mobile Networks is taking will allow them to lower the level of net sales to reach this 10% operating margin to approximately €10 billion, as you said. That is a correct figure.

Do you have a quick follow-up, Sami?

Maybe technical good regarding technologies. There was a slight drop in IPR run rate during Q4. Can you elaborate on that? And then just update on where we will be after the OPPO renewal? I think previously you were talking about €1.1 billion starting this year. But now I guess it must be a bit more than that?

Yes. Thank you, Sami. When it comes to run rate in quarter four, we had one license that expired at the end of quarter three, and that's why we see a run rate change. In 2024, we are guiding an increase in our run rate, but we cannot quantify this yet because we still have some deals that are outstanding, and the content of the deals are confidential, so we cannot provide that much information. However, perhaps in quarter one, we will give you more flavor on this. We have said at least €1.4 billion for the full year, and this is including the catch-up.

Thanks, Sami. We'll take our next question from Richard Kramer from Arete. Please go ahead, Richard.

Thanks very much, guys. Pekka, my question is, I'm conscious that this year you've laid out targets and talked about order strength at the beginning of the year, then needed to reduce your targets for margins and cash conversion. Now you're looking at €1 billion of cash outflows for restructuring. My question is how are you going to mitigate the risk of losing sales or momentum or other opportunities in the midst of this reset? Are you confident that you can undertake the restructuring without losing opportunities that you've laid out, the green shoots?

Yes, David. The biggest restructuring regarding customer interface actually went live already on the first of January. We executed everything very quickly. Q1 will be the quarter of stabilization in the customer interface. I have to say that when we explained the logic to the customers, stating that we want to place highly empowered teams in front of the customer to simplify the organizational structure and shorten the distance between the customer and the decision-makers of each business, that has been well received. When you complement that with the account executive concept, where one of the sales leads takes on additional responsibilities for managing the overall customer relationship and coordinating cross-BG matters, this has been well received. This simplification has been well received. Of course, this type of change always causes stability issues in the short term, but I believe that it will quickly be resolved, and people will start to see the benefits of this new model. When it comes to other cost savings beyond simplifying the customer interface, we need to look at each business separately. As we mentioned, Mobile Networks accounts for roughly 60% of the actions we are taking, reflecting the overall industry outlook and the challenges this business is facing. Progress is already underway in terms of implementation. The most important goal is to protect our R&D output. If I just move on to the other businesses. This is very MN-centric. NI has a different situation because we have, as I said, great order intake in Q4, and we have a 2% to 8% growth outlook for this year. The need to restructure the cost base isn't the same as it is in the MN business. In CNS, the action is mostly centered around portfolio rebalancing. We made some divestments last year, and we are getting close to the type of portfolio we are looking for. The rebalancing is not completely done yet; we're still working on certain things. That’s the name of the game in CNS. Tech, we already discussed, because now with the Oppo deal, and hopefully the rest coming soon, we will see significant stability in that business. All four businesses are in a fundamentally different place regarding restructuring needs.

Okay. Thank you.

Yeah. Thank you. We changed quite dramatically how we see the sale of receivables. The main thing we do when we use the sale of receivables is to mitigate risks, which might be country risk or customer risk and hedging costs in certain currencies. The principle is quite different. In quarter four, we mention that it was a meaningful increase. In some quarters, we see changes in the sale of receivables, and it could be that; like I said, it could be a specific country or customer where we see it’s good to hedge ourselves or in some cases, we also see that the customers pay the sale of receivables.

Thanks, Richard. We'll take our next question from Daniel Djurberg from Handelsbanken. Daniel, please go ahead.

Thank you, and good day, gentlemen. Congratulations on a solid year-end, and thanks for taking my question. I would like to ask you a little bit on coming back to the catch-up and the IPR revenues that you see. The question is really if the €1.4 billion low level that you aim for in technologies in 2024, is this dependent on signing recently expired agreements, and if it also includes HP and Amazon that you have litigation for or if you can more or less meet this €1.4 billion also excluding these three?

Yes, what comes to different deals and exactly their levels, we cannot go into, as you understand, these are confidential. However, we've guided based on our best knowledge and what we see happening throughout the year. We've been clear that this is including the catch-up for the Oppo deal we just signed. We also expect to sign a couple of other deals in technologies that expired before the year-end.

Thanks, Daniel. We'll take our next question from Joseph Zhou from Barclays. Joseph, please go ahead.

Hi. Thank you for answering my questions. First, regarding your free cash flow conversion guidance for 2024, it's still significantly below the long-term target even with the increase from the IPI cash flow payments. I understand you've mentioned restructuring and some prepaid payments that have already occurred. Are there any reasons that would prevent us from expecting a larger working capital reversal considering the 5G cycle? What are we missing here?

Yes. As you mentioned, we will have the negative impact from the prepayments that we received in technologies in 2023. We also expect working capital to continue to have a positive impact based on the analysis. If you sum these, we believe that we are well within the range that we have guided, which improved from last year, which was 20% to 50%. This year is 30% to 60%. For next year, we believe we are well in our long-term guidance range. It’s a step-by-step improvement we see in the free cash flow conversion ratios.

Regarding networking capital, we already saw good release in Q4 last year, which helped drive strong cash flow in Q4. There is still potential there, but part of it was already released in Q4. Additionally, €700 million in prepayments in tech means €700 million lower cash compared to sales in 2024, then there’s restructuring cash outflow in 2024. The catch-up payments mentioned earlier will be both cash and revenue in 2024, but they do not improve the conversion. They improve the absolute cash, but they do not affect the conversion.

Thank you. For the bid projects in North America, how much contribution have you baked into your 2% to 8% NI growth from these bid projects? It has been mentioned that you have better order visibility here. What’s the timing of these project rollouts?

The timing is such that we start to see top line effects in the second half of 2024, gradually into 2025. We have a strong pipeline of opportunities. If I'm not mistaken, there was something small in the order intake already in Q4, but that was small. It’s taking off gradually since they are politically driven projects. Money is allocated at the federal level, then it goes to state levels; it fluctuates with different opportunities with carriers. We haven’t quantified exactly how much of this would be in the 2% to 8% growth assumption in NI. However, as I said, growth is driven more in the second half and isn’t huge in 2024. It will grow gradually through the second half and into 2025.

Thanks, Joseph. We'll take our next question from Artem Beletski from SEB. Artem, please go ahead.

Yes, hello, and thank you for taking my question. I would like to ask on European development, looking at revenue trends, it seems that declines have been accelerating also excluding technologies related impacts in Q4. Could you maybe elaborate on what is happening there? Is there potentially some ongoing inventory digestion in the market?

I mean, there could be some inventory digestion here and there, but the value in Europe is the weak economy, operators, high leverage, high-interest rates, resulting in low investment appetite. The big question is when that will start to change; lower interest rates would certainly help. I believe they will need to start investing again, and they are talking about it, but we haven’t seen much yet. My major concern is that Europe might fall behind the rest of the world in terms of competitiveness because of the quality of digital infrastructure that we have. 5G deployment is slower in Europe than in other parts of the world. Politicians and operators understand this, but it remains to be seen when that will change. I'm confident it will change, but currently, mid-band penetration in 5G radio is clearly lower in Europe. We would hope to see operator market consolidation in Europe to create financially stronger operators. In Europe, we have one operator per four million to five million inhabitants, which is totally different than any other part of the world. In India, there are three to four operators for 1.3 billion people, in China, the same—three operators for 1.3 billion people, and in Europe, one operator for 4.5 million people. The market is so fragmented that it needs consolidation.

Do you have a follow-up question?

Yes. As a follow-up, I would like to ask about some significant progress on your switching side. Could you comment on the profitability of this business? How should we think about it? Is it more like IP Networks-type margin?

That is, of course, highly confidential when we get to one product group for one customer group. But all this has been assumed in the targets that we have both short-term and long-term set for the NI business. The IP business has good profitability, and the targets we have for that business will stay consistent, including growth in switching.

Thanks, Artem. We'll take our last question from Aleksander Peterc from Société Générale. Alex, please go ahead, and if you don't mind keeping it to one question given the time.

Yeah. Thank you. Just a quick one regarding Mobile Networks. Could you provide a broad idea of when you expect Mobile Networks to bottom out and flatten? Is that a 2025 event, or will it happen later? Another way to ask is, when do you expect the AT&T 5G footprint loss resulting from last year's decision to wash out of the base? I know you gave some color on AT&T and all the puts and takes, but just to give us more idea there. Thank you.

I understand your question very well, but you will appreciate that it’s extremely difficult to answer because, as I've said, first of all, we cannot comment on the AT&T situation before we have concluded the negotiations. We expect to continue being a supplier there one way or another. Then there’s the whole Indian question. Volumes are going down, and we’re unsure when operators will invest and how much. Additionally, investment in the 4G re-farming in India will also influence results. And generally, the reality is that nobody knows when the data traffic growth will force operators worldwide, including in Europe, to start investing. It is too early to say when Mobile Networks will reach the bottom. Our outlook for this year has been kept realistic, that’s why we are saying 1% to 4% comparable operating margin; we're sticking to our longer-term ambitions and we need to penetrate into non-CSP segments in the second half of the decade.

Thanks, Alex, and thank you everyone for joining us today. This concludes the Q&A session and today's call. I would like to remind you that during the call today, we have 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. Thank you for joining us.

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