Good morning, ladies and gentlemen. Welcome to Nokia's Fourth Quarter and Full Year 2025 Results Call. I'm David Mulholland, Head of Nokia Investor Relations. And today with me is Justin Hotard, 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 and portfolio basis, and other financial items 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 reconciliation between the two. In terms of the agenda for today, Justin will go through our key messages from the quarter, then Marco will go through the financial performance, and then we'll move on to Q&A. With that, let me hand over to Justin.

Hello, everyone, and thank you, David. Overall, our fourth quarter performance was in line with our expectations, reflecting disciplined execution across the business. Net sales grew 3% in the quarter to EUR 6.1 billion, with operating profit of EUR 1 billion and free cash flow of EUR 0.2 billion. For the full year, net sales were EUR 19.9 billion and operating profit was EUR 2 billion, slightly above the midpoint of our guidance. Free cash flow conversion of 72% was also consistent with our guidance. Stepping back, 2025 was a foundational year in repositioning Nokia for long-term value creation. We strengthened our portfolio with the acquisition of Infinera, simplified our operating model and set a clear strategy at our Capital Markets Day to focus the company on the areas where we see opportunities for differentiation, scale and sustainable market leadership. Now, to give you a bit more detail, let me first turn to Network Infrastructure. In the fourth quarter, net sales grew 7%, driven by optical networks, which grew by 17%. Order intake was solid across both optical and IP networks with a book-to-bill above 1, supported by particularly strong demand from AI and cloud customers. For the full year 2025, we delivered EUR 2.4 billion in orders from AI and cloud customers. This reinforces our view that optical networking will become an even more critical part of the infrastructure to support the AI super cycle, and we are investing to capture near-term demand while maintaining a long-term perspective on the opportunity. In Optical, our 800-gig ZR and ZR+ pluggable products are shipping with initial units performing well in the field. We now have multiple design wins and are supplying into scale deployments. Our focus is on ramping production to meet the strong demand we see in the market. In IP Networks, we made progress on our expansion into data center switching. We launched two new products in the quarter, the 7220 IXR-H6 switching platform powered by Broadcom's TH6 and our Agentic AI solution for event-driven automation management, which reduces network downtime by 96%. We also secured a design win for our next-generation data center switching platform. These are encouraging steps, and we continue to believe revenue will ramp over time as we expand our presence in this rapidly growing market. In our mission-critical enterprise customer segment, book-to-bill was well above 1 in Q4, supported by a growing pipeline from both new and existing customers. Turning to Fixed Networks. Performance was stable year-on-year in Q4. As discussed at our Capital Markets Day, we are deprioritizing certain customer premises equipment products where we do not have meaningful differentiation and which dilute margins. In Q4, our fiber OLT business grew 16% year-over-year, offset by declines in these areas, I just referenced, that we are deemphasizing. This resulted in overall flat performance for Fixed Networks. As I announced at our Capital Markets Day on January 1, we brought together core software, radio networks and technology standards to form our new Mobile Infrastructure segment. This structure is designed to sharpen accountability, improve profitability and position the business for long-term technology leadership. Core Software, formerly a part of Cloud and Network services is leveraging our differentiated cloud-native core network stack to grow faster than the market and continue improving profitability. During the quarter, we won a 5G core deal with Telia and announced the collaboration with Bharti Airtel on Nokia's Network as Code API platform. We now have more than 75 partners using the platform, including 43 telcos. Radio Networks, formerly a part of Mobile Networks, focused on disciplined execution in a largely stable market. We continue to invest to deliver 5G advanced and O-RAN solutions while innovating to establish a longer-term leadership position in 6G and AI-native networks. A key pillar of our strategy is co-innovation. And in Q4, we announced our partnership with NVIDIA. We continue to remain on track to begin trials and proofs-of-concept on AI-RAN later this year. We also announced a market share expansion deal with Telecom Italia, along with contract extensions with Telefonica Germany and SoftBank. Technology standards remains focused on securing long-term monetization of Nokia's patent assets. We signed several deals in Q4 and continue to maintain a contracted net sales run rate of approximately EUR 1.4 billion. At our Capital Markets Day, we also announced the creation of Nokia Defense, a new incubation unit that will serve as the central R&D hub and go-to-market for our defense portfolio. Our priority is to deliver defense-grade solutions based on Nokia's Mobile and Network Infrastructure technologies for Finland and other NATO countries. Nokia Defense also includes Nokia Federal Solutions in the U.S. and includes the technology we acquired from Phoenix Group in 2024. Based on feedback from customers, we see growing demand for our 4G and 5G technology in military environments, both for national security and tactical applications. This is an area where we are continuing to invest, and we will share updates as we make further progress. Finally, in Q4, we closed the transaction to take full ownership of our joint venture in China, Nokia Shanghai Bell. This gives us greater operational flexibility, and we will bring it into full alignment with Nokia's global operating model. As a part of that integration, we expect to deliver approximately EUR 200 million of run rate cost synergies with integration costs of approximately EUR 350 million to EUR 400 million over a period of 24 to 36 months. Turning to 2026, looking ahead, our focus is on disciplined execution to capture growth in AI and cloud and increase efficiency while we're building a high-performance culture across Team Nokia. We now have fewer, clearer priorities, a simplified operating model and a strategy we are executing with speed and accountability. Network Infrastructure remains our primary growth engine, particularly Optical and IP Networks, where we see strong structural demand. In Mobile Infrastructure, our focus is on gross margin and efficiency while we continue to invest in our portfolio for competitiveness and market share in 5G and to transform the business for long-term success in areas such as AI native networks and 6G. From a financial perspective, in 2026, we are targeting an operating profit in the range of EUR 2 billion to EUR 2.5 billion. At our Capital Markets Day, we outlined a series of KPIs to illustrate how our strategic direction translates into financial outcomes. Let me revisit those and what we expect in 2026. Our first KPI is to deliver 6% to 8% compound annual growth in network infrastructure between 2025 and 2028 on a constant currency and portfolio basis and 10% to 12% in the combined Optical and IP Networks businesses. In 2026, we expect growth rates in both cases to be in line with these long-term targets. As expected, the product prioritization decisions we have taken will limit growth in Fixed Networks, while we expect growth in our fiber OLT portfolio to continue to occur due to strong underlying demand. Our second KPI is to expand Network Infrastructure operating margin to 13% to 17% by 2028. This is compared to the 9.5% achieved in 2025. In 2026, we expect measured margin expansion as we ramp new products and continue investing in the long-term growth opportunity we see in the business. The next two KPIs relate to Mobile Infrastructure gross margin and operating profit. In 2026, we continue to expect some top line headwinds from prior contract losses, but otherwise, a stable market environment. Our focus is to continue to target at least EUR 1.5 billion in operating profit, consistent with our performance in 2025. As announced at our CMD on January 1, we have moved four businesses into a new unit called Portfolio Businesses. This includes our Fixed Wireless Access customer premises equipment, and Site Operations businesses, both from Fixed Networks, our Microwave Radio business from Mobile Networks and the Enterprise Campus Edge business from Cloud and Network Services. In 2025, these businesses generated net sales of EUR 850 million and an operating loss of EUR 97 million. In 2026, our target is to conclude a future direction for each of them. We currently assume a lower operating loss in 2026 versus 2025. For Group Common, we expect costs of approximately EUR 150 million in 2026 compared with EUR 190 million in 2025. Overall, we see 2026 as a year where we will make meaningful progress towards our long-term targets. With that, let me turn over to Marco to walk you through the financials in more detail.

Thank you, Justin, and hello from my side as well. As Justin mentioned, we delivered a fourth quarter, which was in line with our expectations and guidance. Net sales were EUR 6.1 billion, that's up 3% on the prior year. Gross margin was 48.1%, an improvement of 90 basis points, driven by improvements in Mobile Networks and Cloud and Network Services. Operating margin was 17.3%, and this is 90 basis points below the prior year, impacted primarily by increased investments in growth areas, including the Infinera acquisition. We generated EUR 226 million of free cash flow and ended the quarter with EUR 3.4 billion of net cash. Let's turn to the business groups now and starting with Network Infrastructure, where net sales grew 7%. In quarter 4, AI & Cloud customers accounted for 16% of our net sales and 30% of Optical Networks. The book-to-bill for the overall segment was above 1 with strength in IP and Optical Networks. Gross margin declined by 80 basis points to 44.6%. Operating margin was impacted by lower gross margin, along with the increased growth-related investments in R&D and the costs associated with the acquisition of Infinera. And then, let's go to Cloud and Network Services, where we saw a decline by 4% in the quarter, and this was mainly due to a different phasing of revenue recognition this year. The business delivered 6% of net sales growth for the full year 2025. Gross margin increased 650 basis points, partly as a result of the reversal of a provision of EUR 37 million in the quarter. So even without this benefit, we would have seen an improvement in gross margin. Operating margin also increased by 470 basis points with improvement in gross margin supported by reduced operating expenses. And then Mobile Networks, net sales increased by 6%, and this was driven by growth in Middle East and Africa, Japan and Indonesia. Full year net sales were stable and consistent with our expectations. Gross margin was 40.1% due to more favorable mix and lower indirect costs. For the full year, gross margin was 37%. Operating margin was 11.3% in the quarter, reflecting the higher gross margin as well as the impact of lower operating expenses benefiting from the ongoing cost saving program. In Nokia Technologies, net sales declined by 17% in the quarter. Catch-up sales in this quarter were lower than the previous year, and we signed several new deals in quarter 4, and our annual net sales run rate remains at approximately EUR 1.4 billion. Operating profit was impacted by a EUR 20 million impairment charge, and this is related to a prior asset purchase, which we deem to have minimal future value in the context of our product portfolio. Now let's look at the net sales by region. And as you can see here, in North America, we saw strong growth in Networks Infrastructure, whilst Cloud and Network Services and Mobile Networks declined. In APAC, Japan and Indonesia grew, while we saw declines in India and Greater China. And excluding Nokia Technologies, Europe grew 4% with strength in Network Infrastructure. Middle East and Africa grew in both Mobile Networks and Network Infrastructure. And then regarding cash, we ended the quarter with a net cash position of EUR 3.4 billion and the free cash flow was positive EUR 226 million and ending the year with a conversion rate of 72%, which is within our guided range of 50% to 80%. And in the quarter, cash increased as a result of the NVIDIA equity investment, which was EUR 0.9 billion. And we also completed the acquisition of the NSB shares, which impacted cash by EUR 0.5 billion. And this equates to 50% of the net cash in the joint venture, which we paid to the other joint venture equity owner and was consistent with the liability we had already recorded on our balance sheet. We now fully own our operations in China, and that will give us a greater operational flexibility going forward to manage the business, just like Justin mentioned. And today, we have also published recast financials based on the new operating structure, we have implemented at the start of the year. And there are a couple of things that I wanted to highlight to help you understand these figures. You will see some differences in net sales compared to our prior reporting, reflecting those units being moved into the new Portfolio Businesses segment, as Justin explained earlier. In Group Common, the recast cost base for 2025 is EUR 180 million as we have reallocated approximately EUR 193 million of the cost to the primary operating segments to better reflect the nature of these costs. And as discussed at our Capital Markets Day, the operating segments are expected to drive efficiencies in the organizations to mitigate those costs over time that we have transferred to them. However, this reallocation had a short-term impact on the segment profitability in NI and MI. And finally, Justin already introduced our new 2026 financial outlook, but I just wanted to share some comments on additional modeling assumptions for this year. For quarter 1, historic seasonality would imply a 24% sequential decline in our net sales, excluding Nokia Technologies. Considering the above normal seasonality we've seen in quarter 4 2025, we currently expect quarter 1 2026 net sales to decline somewhat more than normal seasonality would imply. We also assume the operating margin to be only slightly better than the prior year. Then for the full year of 2026, we expect comparable financial income and expenses of between positive EUR 50 million to EUR 150 million. And we assume a comparable income tax rate of around 26% and 27%, with a slight increase related to the regional mix of profit generation. Cash tax outflows are expected to be approximately EUR 500 million. And we are planning for CapEx of between EUR 900 million and EUR 1 billion as we invest in additional manufacturing capacity for Optical Networks, along with some real estate renewal projects. And finally, we expect free cash flow conversion of between 65% to 75%. With that, let me hand it back to David for Q&A.

Thank you, Marco and Justin, for the presentations. Alicia, could you please give the instructions for the Q&A session? As a reminder and as a courtesy to others in the queue, if you could please limit yourself to one question and a brief follow-up. Alicia, please go ahead with the instructions.

I will now hand the call back to Mr. Mulholland.

We'll take our first question today from Alex Duval from Goldman Sachs.

A couple of quick questions. Firstly, on Optical, it grew 20% in the quarter, but it seems you're saying it will only grow 10% to 12% in full year '26. You referenced good order momentum as well as a solid percentage contribution from AI. So I wondered to what degree your guidance for the segment reflects conservatism? And secondly, as a brief follow-up, you're guiding to a somewhat sub-seasonal trend into the first quarter for the group. I wondered to what degree that's just normalization of a better than seasonal 4Q or whether there are other factors to take into account?

Yes, sure. So Alex, good to hear from you, and let me answer your first question. You're right. We obviously grew 17% in Q4 on Optical Networking. When you look at our Optical Networking business, we are being balanced on the 10% to 12% across IP and Optical Networking, as you said. What I would also emphasize is, we are still transitioning from a base that was still very telco-centric in '25, so 70-30. And if you think about where we were before that, certainly before the Infinera acquisition, significantly telco-centric. So we're building off that base. We're excited about the order momentum. And then, of course, in parallel, we're working to scale production. So, I think as you and I have talked about, we want to be disciplined in our execution and our predictability. And so therefore, that's why we've guided the way we have. But I continue to be very optimistic about this business and the long-term opportunity for some of the factors like scale across networking, the demand we're seeing in overall fiber, some of the recent announcements in this area. So, I think this is a place where absolutely, it's a strategic priority for us, absolutely, it's a focus of capital allocation. And I believe it's a market that we will be a significant player in for many years ahead, but balance on where we are today given the starting point that we had, which is really only three quarters deep in terms of aggressively pursuing the AI & Cloud segment.

And for the second question, if you look in the past as well, when we have had a very strong and higher than normal seasonality in quarter 4, we easily see a larger decline as well. And this is a little bit based on as well how our telco customers are buying. And this is more, I would say, visible in the mobile network area and also the telco customer base that when they have had a lot of purchases in quarter 4 and usually the start of the year, a little bit slower, and that's why we guide that we see a somewhat lower than what we normally see.

Thank you, Alex. We'll take our next question from Richard Kramer from Arete.

Justin, you're pledging to grow CapEx to really record levels of EUR 900 million to EUR 1 billion. Do you have visibility in your order book of Optical or IP orders? And or is leveraging this investment require additional unannounced wins with hyperscalers? And where are you in that sales cycle? And I have my follow-up.

Yes. And obviously, Richard, when you think about CapEx investments in manufacturing in Optical, particularly semiconductor manufacturing, as you're well aware, this is not something you invested in a year and you start generating returns. So this is something where we're looking at the long-term trends. And we've got a lot of confidence in the long-term market trend supported by the near-term demand that we see.

Okay. And for Marco, we saw EUR 300 million of restructuring in '25 and you're guiding to another EUR 450 million in cash outflow. Can investors look forward into 2027 where you think these very heavy impacts on reported versus comparable earnings drop to immaterial revenue levels?

Yes. As we announced in October 2023, we have implemented a cost-cutting and efficiency program. We detailed the restructuring costs expected over the years leading up to 2026. At that time, we projected cost savings between EUR 800 million and EUR 1.2 billion, alongside costs to generate these savings that would be roughly equal, with cash flow aligned accordingly. Typically, cash flow is influenced by our larger presence in Europe, which tends to cause delays in executing various cost actions. This is why we anticipate that 2026 will see a heavier cash outflow. However, we are on track with the plan we outlined earlier.

Thanks, Richard. We'll take our next question from Simon Leopold from Raymond James.

First thing, I wanted to ask about is particularly within the optical space scale across projects are new variant for data center interconnected. Your peers have discussed these projects. Can you elaborate on Nokia's position and how you envision this opportunity developing over the next few years? And then I've got a follow-up.

Yes. Sure, Simon. Good to hear from you. Just a couple of things here. One, this is a space that we think is a part of the long-term trend on optics. I mean, if you look at the long-term demand on optics, think of the drive around scale across right now as being one of the most significant near term. But obviously, then you have speeds, right? We've gone through the 400- and 800-gig transition very quickly. We're ramping on 800-gig multiple pluggable wins, as we've talked about, a lot of active customer conversations on that space, continued momentum in the market in terms of what we see. But then we expect that 1.6 and 3.2 will come. And when you look at that scale across, it's the tailwind for both the technology transitions and the demand. And then, of course, over time, we see scale out increasingly be an opportunity for coherent optics. So that's the tailwind we see. The other thing I would just reference as you think about this is routing for us, in particular, scale across is a tailwind for. So switching is much more about the data center racks, the spine-leaf architecture. But when you think about routing, that's another tailwind. But a key thing for us right now is spending the time doing the work, co-developing, co-innovating with our customers, making sure we're scaling production capacity to take advantage of this opportunity over the long term. And fundamentally, what I see is a much more mature and larger optical market, driven by the AI infrastructure build-out than we've seen in the past. And I think a much more mature ecosystem as well. So there's a lot of work to do for us as an ecosystem and as an industry, but I think a much bigger market. And that's absolutely why we're investing into it and why you see us leaning in on capital, both in terms of CapEx, but also R&D capital in the space.

Do you have a follow-up, Simon? I guess we'll move on. We'll take our next question from Sami Sarkamies from Danske Bank.

You had 5% growth at IP Networks in '25. What needs to happen for this to step up? Are the bottlenecks related to product offering, customer logos or design wins? And then on timing, how much time do you think we need for improvements? Could it happen already this year as you have signed new customers during the last year?

Thank you, Sami. I’d like to highlight a couple of points. First, we've recognized that after integrating Infinera, we were well positioned to pursue the Optical Networking platform, but we've still been somewhat behind in this area. This has been a significant focus for me and for David as he took over. Recently, we announced a new Head of IP Networking, Greg Dorai. Vach Kompella, who is a respected figure in the industry, is retiring, and in finding Vach's successor, we aimed for someone with extensive data center experience. Overall, as I mentioned at the CMD and in discussions with investors, I believe this sector will need some time to show growth. However, I am very pleased with the design win we achieved in Q4 and our current order backlog. This business will require some time to ramp up. We are seeing strong support from the AI and data center expansion and are making encouraging progress in mission-critical areas where we focus on specific vertical markets that prioritize scale, security, and availability, leveraging our background in the telecommunications industry.

Did you have a quick follow-up, Sami?

Okay. I'm wondering on the CapEx outlook, is this going to be like a multiyear undertaking if you think about higher CapEx or just like a one-year thing?

Yes. I believe we will continue to show investment based on the opportunities we see in the market. I see this as aligned with the guidance we've provided and consistent with the growth we anticipate in Optical Networking. In the future, if we perceive a different growth potential in Optical, we may revise our outlook on CapEx. Marco, do you have anything to add?

No, I just want to build on what you said. We definitely see opportunities, which is why we believe it's the right time to invest more to capture those opportunities. We also need to secure manufacturing facilities and capacities to meet the increasing demands we are observing, particularly in the optical segment. However, the capital expenditures involved are not as significant compared to other data center investments. These investments remain reasonable, and we believe they will yield a very good return.

Thanks, Sami. We'll take our next question from Artem Beletski from SEB.

So I would like to pick your thoughts regarding recent news coming out from Brussels. So, what comes to this Cybersecurity Act, the Digital Network Act. So how do you see those proposals impacting your business outlook, what comes to upcoming years?

I believe the Cybersecurity Act and the Digital Networks Act are positive developments that we've been advocating for, especially since I joined the company. The important aspect of the Cybersecurity Act regarding trusted networks is the need for clarity around replacement schedules and support for network operators, as these replacements are substantial undertakings. From our perspective as a supplier, we are fully capable of handling this. The pace at which we've upgraded networks in India and North America shows that we are well-prepared to manage the necessary upgrades in Europe. However, it's a complex technology initiative. We recognize the urgency of moving forward and the need for our customers to have clarity, as the platforms we are investing in now will need to be ready for 6G in the near future. For instance, with the AI-RAN, buying an AirScale platform today ensures it can be upgraded when we launch that technology. Making investment decisions with clarity now is essential for operators, especially when managing projects over a 2- or 3-year timeframe, which requires support since accelerated capital expenditure isn't typically in customers' budgets. It's also crucial to recognize that this isn't solely about radio; it's a significant opportunity for fiber and access networks, which are vital for consumers and businesses alike, as well as for transport networks and the underlying infrastructure. This is a significant advancement, and we are quite pleased with it. Linking it to the Digital Networks Act, there are opportunities concerning spectrum harmonization in Europe. This is an important chance for Europe to enhance its long-term competitiveness in technology, infrastructure, innovation, national security, sovereignty, and economic competitiveness. Looking back at the Internet super cycle illustrates how significant infrastructure investments led to success. Europe is in a strong position regarding AI due to its advanced industrial automation technologies, robust manufacturing industries like automotive, and an abundance of talent, which we aim to continue cultivating to support the region and foster a broader ecosystem.

Did you have a quick follow-up, Artem?

Yes. I would like to ask a follow-up on Optical Networks. And could you maybe comment whether you see some supply-related constraints when it comes to growth? I recall from CMD, so you have been commenting about order growth year-to-date a bit more than 40%, and we do understand that the market fundamentals are really robust on that front.

Yes. Look, I think it's a great question, Artem. So first of all, obviously, if you think about this broader ecosystem, the one thing I would remind everybody is the consistent thing in the AI data center build, AI infrastructure build has been there have been constraints. There's been power constraints. There's been connectivity constraints. There's been computational silicon constraints. There's news of memory constraints right now. One of the reasons I think when we look at this, we don't see the same dynamics of the telco and Internet bubble that you saw in the late '90s is because this infrastructure build has been consistently constrained. So what we see is, we do see supply constraints that's normal with this kind of scale and build. And obviously, part of our investments is not just in our own capacity but also in supporting the ecosystem and building its capability and capacity. And again, if you look at Optical, Optical is not nearly running at the kinds of volumes that you'd see that the microelectronics industry or the traditional computational electronics industry because it doesn't have the same consumer volume off the side of it that's driven a lot of the automation and capacity that's existed. So, all of these things need to be invested in. And again, this is why we think that the market has great long-term potential given the technology, but also a lot of ongoing investment that we and the entire ecosystem need to cultivate to make sure we can deliver on the long-term success. And it's part of why we think we're favorably positioned with our indium phosphide technology and manufacturing facility.

Thanks, Artem. We'll take our next question from Daniel Djurberg from Handelsbanken.

Yes, on the Mobile Networks, it was clearly better than expected, and some decrease primarily due to North America. And can you comment a bit on North America? Are we comparing apples-with-apples now with regards to AT&T loss? And also do you see any possible inroad again with AT&T with the 600 build, for example, with the FirstNet upgrades? Any comments would be grateful.

Thank you, Daniel. In 2026, we expect to face some challenges in North America related to the Radio Access Network due to customer losses, which will have an impact. However, the market in the Radio segment appears quite stable. The area where we are seeing growth is in AI and Cloud, which is performing very well in North America currently.

Let me take AT&T. First of all, and just to remind everybody, AT&T is a very, very large, strategic and important customer for us. They are a customer for us across core networks, fiber access. So if you think about NI and MI, they're a very important customer for us and a very strategic one, given the investments that they're making today and their networks. And we've talked about a little bit of that in the past as well. Look, from my standpoint, as I think about customer opportunities and market opportunities, we want to pursue every piece of profitable market share that we can. And if we're honored to be a part of their network in the future, we'll absolutely take that opportunity. Right now, our focus is on delivering on our commitments to them and to all of our customers. And as we said in the restructuring, as you heard from Raghav at CMD, becoming an easier company to deal with from a customer perspective, particularly for our telcos where we need to do more to be working with them around collaboration, co-innovation and making sure that we help them deliver the simplification and the operating leverage they need in their networks to deliver on their strategies.

Thanks, Daniel. Did you have a follow-up?

Yes. Perhaps just a short one on the book-to-bill on Optical and IP Networks being positive still. Can you give some more comments on those on a separate note, i.e., comparing them, the relative magnitude or something?

Each one is good. Each one is healthy on the book-to-bill. If you put them together, they're good. If you split them, they're good. We're not blending.

Thanks, Daniel. We'll take our next question from Terence Tsui from Morgan Stanley.

I had a question around the operating guidance for the full year, please, of EUR 2 billion to EUR 2.5 billion. I would love if you can provide some color around the EUR 500 million guidance range, please. You noted that 2025 was slightly ahead of the midpoint. So I'm just interested to learn about reasons to be a bit more optimistic, and reasons to be a bit cautious in your thinking. And then the quick follow-up relates to Q1 guide. What FX are you assuming there? Are you using the spot of USD 1.2?

Marco, do you want to take that?

Yes. Regarding our guidance of EUR 2 billion to EUR 2.5 billion, we mentioned at the Capital Markets Day that we will be launching new products this year. New product introductions typically affect gross margin, which we anticipate. However, these launches are crucial for our long-term goals, and we see promising market opportunities ahead. Similarly, as we've previously stated, we are increasing our investments in AI and Cloud, which will impact our operating expenses, but we recognize significant growth potential in these areas moving forward. It is essential for us to prepare for these prospects. Additionally, this is a transformational year for us, as we are making numerous changes to ensure our operations are lean, efficient, and capable of seizing market opportunities.

Yes. I think when considering the range, our goal is to be disciplined with our guidance and execution, making it more predictable. I've discussed this extensively, and so has Marco. It's important to recognize that we are currently experiencing two very different business cycles: significant growth in AI and Cloud, a flat market in telecommunications, and emerging opportunities in defense and mission-critical enterprises. Acknowledging that the businesses and markets are in different cycles is essential for providing you with visibility. Should anything change our outlook, we will update you accordingly. We aim to offer as much visibility as possible and ensure that our targets are consistent and predictable. For the past two quarters, we've been working towards establishing a more reliable pattern. While that hasn't been our history, it is a key part of our strategy as we pursue growth opportunities, ensuring we provide visibility and deliver on our commitments.

The currency rate, we have USD 1.18 in our estimate, and this is based on what we see right now. And if there's any changes in the currency, we will update as well. But remember that we have about at least half of the U.S. revenues, for example, U.S. flows are hedged for the full year. So if we just look a little bit the sensitivity, before hedging a EUR 0.02 move on the USD versus euro would imply an operating profit of EUR 50 million change. But as I said, about half of that is hedged.

Thanks, Terence. We'll take our next question from Felix Henriksson from Nordea.

Yes. Partly relating to the previous question on supply shortages. Are you expecting to encounter any headwinds from these rising memory prices on your gross margin? And can you just provide some color on your cost exposure to this trend?

Yes. Overall, when considering our bill of materials at a macro level, this is a small part of it. It’s a portion, but not a significant one. Additionally, regarding supply and commitments, we are focused on ensuring we secure the supply based on our existing commitments, and we do have long-term agreements in place for this. Moreover, as you may have noted in the industry, we anticipate this to influence pricing. From our viewpoint, this is a market effect that is consistent across the board. We will address it, but overall, this is not a major part of our revenue, although it is an important aspect that we manage.

Do you have a quick follow-up, Felix?

Yes. Just quickly on your balance sheet and net cash. I think the end of the year net cash implies around 17% of last 12-month net sales, which is slightly above the 10% to 15% range that you used to have historically. Are you sort of happy with those levers? Or do you see anything that you would want to do with that setup?

Yes, thank you. Our approach to capital allocation is straightforward. Our top priority is increasing our investment in internal R&D whenever possible. As mentioned earlier, we see opportunities, particularly in the AI and Cloud customer segment, so we're increasing our investments in that area. Our second priority is to enhance our delivery capabilities and seize market trends through mergers and acquisitions. The third priority is maintaining a stable and growing dividend over time. Lastly, if we identify any excess cash, we may consider share buybacks. This is the framework we adhere to, and we will keep you informed of any updates.

Thanks, Felix. We'll take our next question from Emil Immonen from DNB Carnegie.

I just had a question on the investment in the CapEx. It's quite a big step up. And I'm just wondering if it's all about increasing your capacity, how much would you say that your capacity is already utilized? So, are you working at full capacity? Or how should we think about kind of ramping up production and how you plan for that overall?

Sure, Emil, thanks for the question. We have an existing facility in California and are investing in a new one, which was initiated by Infinera before we acquired them. Our investment is also supported by partial funding from the CHIPS Act. The new indium phosphide facility is expected to come online later this year. We are on track to use capacity in the current facility, and the new fab is necessary to meet the increasing demand and our forecast. While it will not contribute much to production this year, it is critical for our operations because our photonic integrated circuit is a key differentiator for us. Unlike traditional semiconductor fabs, our capital investment for adding capacity is generally smaller due to the nature of optical technology and indium phosphide. Therefore, while our CapEx is significant overall, it remains modest at about 5% for the company. In terms of the broader semiconductor industry, our CapEx is still quite small compared to the larger investments made by our partners in memory and computational silicon.

Do you have a quick follow-up, Emil?

Yes. To clarify how aggressive you feel, is this still a nominal amount? Would you characterize your approach as aggressive, or are you only investing to meet the current demand without wanting to overextend at this time?

I believe this market is changing rapidly, Emil, so our discussions about the long-term market and our investment strategies are ongoing. Currently, if we consider the market landscape, we are vertically integrated, as are some others, while some are not. There is a clear segmentation in the value chain; for example, computational silicon is not vertically integrated, with leaders such as TSMC, Intel, and GlobalFoundries. In contrast, memory is vertically integrated, which is another strategic consideration we'll explore moving forward. At this moment, we recognize significant value in that vertical integration. Our decision is to ensure we have enough capacity to meet demand, knowing we are in a fast-paced market. There are evolving opportunities for scaling, as I mentioned earlier. We also anticipate that as speeds increase in the data center, there will be more potential for coherent optics within that space.

Thanks, Emil. We'll take our next question from Jakob Bluestone from BNP Paribas.

Just a quick one. Can you maybe just give us an update on the H1 versus H2 sort of margin phasing that you flagged at the CMD? I don't know if you can maybe quantify how big we should think about that? Or is it just kind of the normal seasonality of the business given it always tends to be a bit Q4 weighted anyway?

Yes. Thank you. Yes, especially as we said that this is visible in the Network Infrastructure side, considering that we launched new products in the first half, and that's why we see this margin impact. We haven't guided exactly per quarter, but of course, we see that the second half, we should see improvement in the margins in this field as well. But it's just that it takes some time before we come over this ramp-up phase, and the second half is that why giving a little bit better margin profile than first half.

Thanks, Jakob. Did you have a quick follow-up?

Just a quick one, just on the memory pricing comments. You mentioned that you have long-term contracts. I mean, given it looks like you probably have elevated pricing for at least beyond this year. Can you maybe just give us a sense of those contracts multiyear?

Yes. I mean, I would think of these as multiyear contracts. And obviously, the supply agreements are multiyear and then pricing varies depending on the contract term.

Thanks, Jakob. We'll take our next question from Sébastien Sztabowicz from Kepler Cheuvreux.

On Mobile Infrastructure, you don't provide any guidance and notably for sales, maybe given more limited visibility. The LAN market is now stabilizing. Do you see any specific downside or upside to your market share in mobile in 2026 beyond the noncontract loss at AT&T? And the second one is on the cost savings. Where have you finally ended 2025 in terms of cost savings? And what do you expect for '26? Do you plan to accelerate a little bit further the cost-cutting actions beyond 2026? Or you will be more on a normal OpEx run rate going forward?

I can start. In the mobile markets, as we mentioned earlier, the market appears to be quite stable in 2026, with some regional differences. We anticipate a potential recovery in India, while there are pressures in regions like Latin America and other areas. Our objective, as outlined during the Capital Markets Day, is to enhance profitability in Mobile Infrastructure. We aim for a gross margin of 48% to 50%, and we expect to grow from the EUR 1.5 billion levels towards 2028. Our goal is to capture market share whenever opportunities arise in the mobile sector. As for cost savings, I'm not sure if...

I would like to emphasize two points. Firstly, there is indeed some mix, as you mentioned. Secondly, we are not pursuing revenue just for the sake of revenue. The guidance we provided on gross margin and profit highlights our primary focus on maximizing these two areas while maintaining the necessary scale in the business. We are committed to working with valued customers and delivering services where they see the benefits of our technology platforms and related services. These are the key dimensions of the approach Marco described. Would you like to discuss cost reduction?

Yes, when it comes to cost reductions, we have the program now, which is running until the end of '26. And we believe that we're going to deliver according to those promises, what we have said earlier as well. So, and beyond that, we don't have any cost-cutting programs. What we've said also is that what we do continuously is to secure that we are focused on efficiency, operational leverage, and securing that we are doing things in the most efficient way continuously. So, this is something that we are getting into everyone's DNA that is the way of working in Nokia.

Thank you all. And apologies to those still in the queue, but we've run out of time. So this concludes today's call. I'd like to remind you that during the call, we have made a number of forward-looking statements 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. Thank you all for joining us.

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