Hi, everyone, and welcome to the Nokia Q1 2023 Results Call. I'm David Mulholland, Head of 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 of 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 basis, and margins will be based on our comparable reporting. Please note that our Q1 report and the 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, Pekka will give a quick overview on our financial and strategic progress in the quarter and then Marco will go into a bit more detail for the key factors impacting our financial performance along with our outlook to 2023. With that, let me hand over to Pekka.

Thank you, David, and good morning, everybody. Q1 has been a busy and exciting quarter for us. We started this year with the unveiling of renewed corporate strategy. And as you remember, refresh brand at Mobile World Congress in Barcelona. We shared the 6 pillars of our updated strategy in Q4, which you see on the slides. I won't go into detail about them again. But in general, in Q1, we have executed well on gaining market share in the CSP space, which is the first pillar. You can see that very clearly when you look at our growth rates. And we have also seen enterprise, pillar #2, continue to rise as a share of the group sales and was another quarter at close to 10% of the group, growing 62%. Regarding pillar 3 and actively managing our portfolio, there were some actions taken in Q1. We have signed agreements to divest part of our RFS business, and we have sold our VitalQIP business. Also, we recently agreed to sell our stake in the joint venture, TD Tech, subject to closing conditions. These actions won't significantly impact our financials, but are important proof points of how we are managing the portfolio. Underneath the 6 pillars are 4 enablers. Talent, which is about developing future fit talent. Long-term research is important. We believe that sustained technology leadership is a key driver of our success. Digitalization, we are increasing the digitalization of our own operations to increase our own performance and productivity. And finally, brand. The new branding reflects who we are today, a B2B technology innovation leader, unleashing the exponential potential of networks. So with that, let's now turn to the financials. We delivered a solid start to 2023, with Q1 net sales growing 9% in constant currency. We saw double-digit growth in both Network Infrastructure and Mobile Networks, reflecting the ramp-up of 5G deployments in India as we expected. We also saw growth in CNS, and I will come back to the decline in technologies later. Our comparable operating margin was 8.2%, a decline of 270 basis points year-on-year, which was primarily due to expected greater seasonality in Mobile Networks' profitability, a weaker contribution from Nokia Technologies in the quarter and the negative impact from venture fund investments. As we look forward, we are starting to see some signs of the economic environment impacting customer spending. However, given the ongoing need to invest in 5G and fiber, we believe this uncertainty is primarily a question of timing. We will maintain our cost discipline to ensure we can successfully navigate this uncertainty, and we remain on track to deliver another year of growth in 2023 with our outlook unchanged. If we now turn to address each of the business groups in more detail. And first, looking at the performance of Network Infrastructure. We delivered 13% growth year-on-year in constant currency. Optical Networks grew 45% with good engagement for our PSC 5 solutions and with some benefits from catch-up sales from the supply chain challenges we saw in 2022. IP Networks grew 13%, driven by North America and also a strong performance in enterprise. Our new FB 5-based routing products are now shipping, and we accept a gradual transition to the new platform in the coming years. We saw a small decline of 5% in Fixed Networks against a tough year-on-year comparison. Weakness in fixed wireless access offset continued robust demand for fiber. Submarine Networks grew 11% as web scale-driven project deployments continued to drive growth. Gross margin expanded 330 basis points as a result of product mix benefits and lower costs in areas such as logistics, which have declined versus last year. Operating margin of 15.3% was up 540 basis points versus last year, reflecting our gross margin expansion, which was only partially offset by higher OpEx. Going forward, growth rates are expected to slow in the coming quarters as Q1 benefited from some catch-up, as supply chains normalize and with comparisons becoming more challenging, but we remain confident in our competitive positioning. I'd also like to highlight the product launch we made in Optical Networks in Q1. Just before Mobile World Congress, we unveiled PSE-6s, Nokia's sixth-generation super current optical engine for high-performance optical networks. With this product, PSE-6s, Nokia brings to market new optical transport capabilities, including the ability to deploy solutions with 1.2 terabits per second of wavelength, and because we are able to connect two chips together on a single line card, we can support up to 2.4 terabits per second, which is an unmatched capacity on the market. We have also set a new benchmark in performance, enabling reach of over 2,000 kilometers at 800 gigabits per second. Sustainable network evolution with 60% less power consumption per bit compared to previous generations. We had great take-up of our PSE-5 solutions already and we see good potential to continue that momentum with PSE-6s. Our interactions with customers have been extremely positive so far. Then turning to the next business group, Mobile Networks. Also, there, it was great to see a 13% growth in the first quarter. It was driven, as we expected, by the ramp-up of 5G deployments in India. But we also saw good traction in Europe. Together, these more than offset the expected softening in North America sales in the quarter. North America had seen a front-end loaded investment profile in 2022. So this quarter marked a normalization of customer spending and also reflected some inventory depletion. With respect to gross margin, the regional shift had an impact as expected, but disciplined cost control partially offset this at the operating margin level. As we look forward, we expect to see broadly similar trends in the second quarter with continued pressure on gross margin from regional mix before we see this start to progressively improve in the second half of the year. As I mentioned earlier, it's clear that there is some economic uncertainty impacting customer spending plans. In that regard, it is worth noting that if we look globally, excluding China, only about 20% of sites, mobile base station sites, I mean, are currently active for mid-band 5G, which should help illustrate how much investment still needs to be made. And even if we look at some markets like North America, which had invested earlier, mid-band site penetration is still only around 50%. At Mobile World Congress, we also unveiled Habrok, our latest generation of industry-leading AirScale radios, which deliver future-ready performance. Habrok has high output power for increased coverage while its lower power consumption improves energy efficiency by 30%, lowering total cost of ownership. This new generation of radios enables form factor improvements over earlier generations while the Habrok 64 weighing only 24 kilograms, making them fast, easy to install. And of course, they are all powered by our cutting-edge ReefShark chipset, some of which are based on 5-nanometer technology. These optimized products refined radio performance with ultrafast 5G speeds and capacity where it's needed. And then moving to Cloud and Network Services business. CNS grew by 3% in the quarter with growth in both core networks and enterprise. Gross margin declined as we saw a shift from software sales to lower-margin hardware sales in the quarter. So that was primarily a mix question. Operating margin was minus 2.6%, resulting from lower gross margin with some increases in SG&A and R&D expenses as we continued to invest to strengthen leadership, especially in campus wireless. Our rebalancing work in CNS continues and in the quarter, we divested VitalQIP, a relatively small IP address management product, which was within CNS. For the full year, we continue to assume a 5% to 5% -- an 8% to 5% operating margin, keeping in mind this remains a business with significant seasonality in Q4. Nokia Technologies' net sales declined by 22% in the quarter. On a year-over-year basis, there were 3 factors driving this decline: the fact we no longer benefit from the license that had an auction exercised in Q4; lower net sales from a smartphone vendor whose market share meaningfully declined; and finally, lower brand licensing. Excluding these 3 factors, our licensing income was essentially stable, also accounting for the renewed agreement with Samsung. We know there have been many questions around our technologies business in the past year as we navigate the smartphone license renewal cycle and with this slide, we wanted to give you some more detail on the moving parts. We start from the EUR 1.4 billion to EUR 1.5 billion run rate we talked about back in Q2 '21 before some agreements started expiring. You can see the moving pieces from then to the EUR 1 billion run rate you now see in Q1. The two biggest factors are the deals that are currently in litigation or renewal, and the 10-year license, which was signed in 2014, but then saw an auction exercised in Q4 2022, which meant all outstanding revenue was recognized for that license. Consequently, this agreement no longer benefits our income statement. There have also been some agreements with smartphone vendors that are no longer active or whose market share has meaningfully declined, which needs to be reflected as we go through the renewal cycle. You can also see the benefits we have seen from our progress in growth areas like automotive and consumer electronics. And finally, there is the impact of brand licensing, which was weak in Q1. This brings you to the current EUR 1 billion run rate. We remain confident we will return to the EUR 1.4 billion to EUR 1.5 billion run rate. The biggest step to getting there is smartphone license renewals. As you know, we are in active litigation on some of those. We remain confident in our position and that we will see a good resolution to these deals. We also continue to see opportunities in the future to continue to expand in our focused growth areas. Looking now at another one of our focus areas, the enterprise customer segment. In Q1, we saw continued momentum in our enterprise sales with growth of 62% and it was almost 10% of group sales for the second quarter in a row. Growth was particularly strong in web scale, where sales more than doubled in the quarter. Private wireless continued to grow strongly double digit and now has more than 595 customers. Customer engagement also remains positive as we added 73 new enterprise customers in the quarter. And with that, let me hand over to Marco, who will take us through the financials in a bit more detail.

Thank you, Pekka, and hello from my side as well. So looking at our net sales performance by region, our 9% constant currency growth was fueled by India as expected, with 5G deployments continuing to ramp up for Mobile Networks in Q1, but also Network Infrastructure showed strong growth in the region. In Europe, you see that we had a 13% growth, excluding Nokia Technologies, with strong double-digit growth across the other 3 BGs. Elsewhere, we saw growth in both Middle East and Africa and Latin America. These were somewhat offset by North America, which declined 12% overall, driven by Mobile Networks and partly offset by increases in Network Infrastructure and Cloud and Network Services. Greater China and Asia Pacific also declined somewhat while Submarine Networks grew by 11%. So in summary, quarter 1 largely played out as we expected, with 5G deployments in India heavily influencing our Q1 top line. Then turning into the operating margin performance in the quarter, and you saw the decline 270 basis points and ended up at 8.2% operating margin. This decline largely reflects the impact of regional and product mix, especially in Mobile Networks and Cloud and Network Services. We did see some benefit from that 9% group net sales growth, which provided some operating leverage. You can also see that the lower overall level of net sales in technologies had a negative impact on operating margin. And finally, our venture fund had a year-on-year negative impact of EUR 70 million, which is recorded in other operating income and expense. And the low value in this quarter of EUR 30 million was evenly split between FX fluctuations and revaluations. And then looking briefly at operating profit performance by business group. Without repeating what Pekka already said in his remarks, you will see that the strong profit expansion in Network Infrastructure was somewhat offset by lower profits in Cloud and Network Services and Mobile Networks. Also, Nokia Technologies declined, as we explained, and drove profits lower. And also, the Group Common, which is negatively impacted by the Nokia venture funds, as I mentioned in the previous slide. Then moving to cash. Free cash flow in the quarter was negative EUR 147 million. And the main driver of this was a decrease in accounts payable driven by quarter-on-quarter decrease in cost of sales within net working capital. Cash was also negatively impacted by cash taxes, CapEx and restructuring costs. And I'm pleased to see as well that we returned about EUR 190 million to our shareholders through both dividends and share buybacks. This all led to a net cash balance of EUR 4.3 billion at the end of the quarter. And then if you look at our addressable market, we have updated this to show our latest view across business groups. And the adjustment we've done is on our view on Mobile Networks, and we've taken down that from 5% to 4% as we start to see some impact of the economic situation on customer spending. And CNS has also reduced slightly from 4% to 3%, while Network Infrastructure remains at 4%. And then turning to our outlook for the year, which remains unchanged in constant currency. We did adjust our net sales outlook to reflect latest FX rates, with the range now at EUR 24.6 billion to EUR 26.2 billion. And we also reiterated our comparable operating margin guidance of between 11.5% to 14%. And notably, we updated 2 of our outlook assumptions today. The first one is the Group Common and Other operating profit, which is now expected to be negative EUR 350 million to EUR 400 million, and this is driven by the negative impact that we had from Nokia venture funds in quarter 1 and how the valuations have developed in venture markets. And the second is around our CapEx assumptions. We have increased our expectations for this year to EUR 700 million. And finally, a mention of our updated capital management policy, which we announced earlier in quarter 1. Nokia's previous target in terms of cash management was to maintain a gross cash position equivalent to at least 30% of net sales and going forward now, with a target to maintain a net cash position in the range of 10% to 15% of net sales. So change from gross cash to net cash. And this is to answer that we can continue to invest in the necessary R&D to maintain and further improve our technology leadership, also fund working capital requirements in support of our growth ambitions and to main some flexibility -- to maintain some flexibility for bolt-on acquisitions. And considering the ongoing macro uncertainty, our expected growth and working capital requirements in 2023 along with already announced shareholder returns, we are not imminently planning to take action to align with this target. However, assuming the expected significant improvement in cash generation in 2024, we would then look to start acting to align the net cash position with the long-term target. And this can be done, for example, through increased shareholder returns and/or potential bolt-on acquisitions. And with that, I will hand over back to Pekka for a few concluding remarks.

Thank you, Marco. If I can just very briefly summarize how we see our Q1 performance before we turn to Q&A. So we had said 2023 would be another year of growth, and we have started the year strongly in that regard with 9% net sales growth. We are executing on both our ambition to gain share in the CSP space and grow enterprise as a percentage of our net sales. As we had said previously, seasonality will be different this year to the last 2 years, but it is playing out largely as we expected, and we remain on track for our full year targets. Looking forward, there are some signs of the economic outlook impacting some customer spending plans. But if we maintain our cost discipline and execute on our strategy, I believe we are in a strong position to navigate the challenges ahead. And with that, I'll hand it back to David for the Q&A.

Thank you, Pekka and Marco, for your remarks. Before we move to the Q&A session, I just wanted to highlight that we will be hosting our next progress update presentation on the 15th of June, which will be on our Network Infrastructure business. The event will be in the afternoon in London, and it will be a hybrid event for those who aren't able to join in person, so it will also be webcast. But with that, let's start the Q&A. [Operator Instructions]. Alex, could you please give the instructions?

[Operator Instructions]. I will now hand the call back to Mr. David Mulholland.

Thanks, Alex. We'll take our first question today from Andrew Gardiner from Citi.

Mine was on just sort of the relationship between technology and your full year guidance. Clearly, we had a slower start to the year in technologies similar to how we did last year where we were working for some of the license agreements to come through, which, of course, didn't. The added pressure this year now from Microsoft and from the handset market, but it's still incredibly important factor for you with your full year group level items. Can you just give us a sense as to your visibility into things improving here for the back half of the year and how that key profit driver is going to improve and allow you to meet that group level profit guidance?

Yes. Thank you, Andrew. And yes, that's correct that we have, I would say, 2 biggest deltas, the agreement that you mentioned, legacy agreement from 2014 that was recognized in the end of last year. And of course, the 2 big ones, which are in litigation and renewal. And just as Pekka showed in his slide, we have some agreements with smartphone vendors that are no longer active or ones that have lost market share. And then this will be reflected as we go through the renewal cycle as well. But we believe that the underlying fundamentals remains strong. And I would say that the Samsung deal that we made is a good example of that. And that's why we are confident that our portfolio is very strong, and we will get back to the annual run rate of EUR 1.4 billion to EUR 1.5 billion net sales after we have concluded these current license renewal cycles.

Can I add, Andrew, just one point to reinforce the importance of the Samsung renewal. We, of course, when we created this plan to get to this EUR 1.4 billion to EUR 1.5 billion run rate, we had made certain assumptions as to what deals that run rate would consist of with then value allocated to it. And I'm happy to confirm that the Samsung deal is in that ballpark where it is expected to be. So that is an important part of this EUR 1.4 billion to EUR 1.5 billion strategy.

Did you have a follow-up, Andrew?

No.

Thank you, Andrew. We'll now take our next question from Alex Duval from Goldman Sachs.

I wanted to focus on to Network Infrastructure, where you had another very strong quarter in the context of some peers actually talk about weakness. So I wondered if you could explain the delta there, and how sustainable is the momentum for the balance of this year and perhaps even into 2024. I think you did state that some of the catch-up from supply constraints will fade in some of the areas. So to what extent do you think underlying strength will continue?

Yes. Thanks, Alex. And of course, as we have discussed many times, the fundamental thing that is driving all this that we are seeing in Network Infrastructure is the technology investment that we have made and the incredible strength of the portfolio as we are seeing in IP Networks in fixed broadband. Now perhaps a bit more lately also in Optical Networks and, of course, in Submarine Networks. So that is the fundamental driver that is helping us to take market share. And that definitely continues to be our goal also going forward. Now we have seen 2.5 years of excellent execution from Network Infrastructure. And of course, this Q1 is a fantastic testimony of the strength of the portfolio. Just a little bit of caution here because there was some strong ordering last year because of what is that people had regarding supply chain capabilities and so on, chipset semiconductor supply chain problems, et cetera. And there is some catch-up deliveries and catch-up sales now in this. And that is the reason why we are just saying that even though our position is strong, it continues to be strong, we need to be a little bit careful that you don't just extrapolate from Q1 towards the rest of the year. Of course, also, in this business, we have a lot of customers who are currently thinking that when should they invest, how much should they invest. The economic uncertainty is showing also in this business. So just a little bit of caution, while, of course, the overall picture in this business continues to be extremely positive.

Thank you, Alex. We'll take our next question from Daniel Djurberg from Handelsbanken.

My question would be a little bit -- if you could give an update on the competitive landscape. We heard a little bit of rumors from Samsung taking share in perhaps in the U.S. and also an update on the European landscape would be great with regards to Huawei, et cetera.

Well, first of all, we do not comment any rumors. We have a strong position in the U.S. and actually, after some of the decisions that customers made in mid-2020, which led to a lower market share for us, we have not lost any market share in Mobile Networks in North America. Actually, we have regained. We have taken back market share with some of the Tier 2, Tier 3 suppliers. And our relationship with also T-Mobile is extremely strong. We are clearly one of their key suppliers, and we have a long-term 5G agreement with them. Then the other part of the question, you broke up a little bit, but did I understand correctly that you asked about Huawei and swaps and so on?

Yes. Yes, correct. In European markets, mostly.

Yes. okay. European markets. So as Marco said, we are growing in Mobile Networks in Europe. We had double-digit growth there overall. If you exclude Nokia Technologies from the figures, as you should, we had 13% growth in Europe in Q1, which was across the board, including Mobile Networks. So we are clearly taking market share in Europe at the moment. And the big picture when it comes to Huawei swaps continues to be roughly the same as we have said before that we have taken about 50% of those opportunities.

Thanks, Daniel. We will take the next question from Simon Leopold from Raymond James.

I appreciate you're not explicitly guiding for the June quarter, and you've remained, I think, upbeat relatively speaking on the full year. But given what we're hearing about inventory activity at the operators, and I think you've alluded to this. But if we could get a little sight on how you're thinking about the absorption of capacity by carriers in the June quarter and how to think about what you really mean by not exactly seasonal? And then I've got a quick follow-up.

Okay. If I start, and Marco feel to add if there's anything missing. But this whole inventory question, first of all, when we look at the big picture, this has been pretty much a North American story and very much a Mobile Networks story. So we are talking about Mobile Networks in North America. We do believe that Mobile Networks' second quarter will see similar trends as the first quarter. But then again, since we are maintaining our full year assumption at 7% to 10% comparable operating margin there, you see that we are expecting a recovery then during the second half of the year. But again, this is a Mobile Networks story. We are not seeing similar trends in the other businesses.

And just as the follow-up. You continue to sound, I think, somewhat more upbeat on mobility than some of your peers as well as some of the market research. And I know we talked about this at Mobile World Congress, but I'd like to sort of revisit how you're thinking about your business for the full year and beyond in terms of this idea that we peaked and this is a difficult year. Could you maybe unpack a little bit about sort of the Nokia-specific views on mobility trends?

I think the difference between what we are saying that what both market analysts and to some extent, some of our competitors are saying, I mean, the difference could be the pace of deployment in India. The North American view is pretty similar. I can't see any kind of big differences there, whether you compare us to what our competitors are saying or what market analysts are saying. We are seeing similar trends, including the fact that these issues will continue in the second quarter. But then, especially comparing us to, for example, Dell'Oro, we seem to be more bullish on the size of the Indian market this year. And we believe that this pretty much explains the difference between our estimates and what they are saying.

Thanks, Simon. And we'll take our next question from Aleksander Peterc from Societe Generale.

Yes. I would have just a question. The first one would be on seasonality in the phasing of more networks margins, which you cited for this year. Could you help us understand what will be the key drivers for the better gross margin in the second half? Is it a function of better geographic mix with North America recovering? Or is it lower contribution from lower-margin network growth in India? And then I have a follow-up.

Well, first of all, the Indian rollout will continue. That will be a story that you will see throughout the year. Clearly, the biggest needle mover compared to H1 and H2, which is driving the 7% to 10% full year forecast is North America. We do expect, as I said earlier, North American volumes to recover in H2.

Just to add, like I said, we said earlier as well that we believe that the volume will give us leverage on the cost side. And that's why we focus on the operating margin and not on gross margins.

As a follow-up, please, on Network Infrastructure, so we understand there was a catch-up related to the easing of supply chain constraints. Would you be able in any way to quantify this for us or maybe indicate if we should see much lower than usual seasonality in the second quarter versus first? I know you don't guide by quarter, but it was quite important to know if NI is going to go down in revenue trends in Q2 versus Q1.

I actually partly answered this question already earlier, but I'm not going to go into details when it comes to second quarter. We made an exception when it comes to Mobile Networks because we clearly see similar trends there as in Q1. Without repeating what I said about NI earlier, we maintained the full year 11% to 14% for the reasons that I described. There was some catch-up in -- catch-up sales in Q1. There is some general uncertainty on the market, and that leads us to maintain the full year 11% to 14%.

We'll take our next question from Francois Bouvignies from UBS.

My question is more -- you mentioned the trend in 2023 and the H2 recovery dynamics with the U.S. mainly coming back and India still strong, if I remember -- if I interpret correctly. So the margin should get better. If we look a bit beyond, I mean, 2024 specifically, when you look at the U.S. CapEx comments still subdued, I would say, I mean just by looking at public comments from Verizon. So we are looking not big recovery in the U.S. at least for 2024. India, given the strong year, strong rollout pace, I mean, we can also argue the sustainability to 2024. So maybe can you help us quantify or maybe qualitatively give us some drivers into next year? I mean, do you still expect to grow your end market after the dynamic of this year? That would be very helpful.

Of course, in Mobile Networks, as I said, the fundamental driver as we see it in 5G is that how big part of the networks have been upgraded to things like mid-band capacity, which is really the thing that is driving the data capacity in the network because the data traffic will continue to grow. We are not seeing that slowing down despite of the economic uncertainty. So the big picture remains healthy. The operators will have to continue to invest if they want to stay competitive. Right now, there is some hesitation because of the economic uncertainty, because higher interest rates and then also some of the supply chain normalization, which means that some of the inventories that they have built, they are coming to a conclusion that they will not need them anymore. But the fundamentals in this business, we do believe remain healthy. Then of course, every operator needs to make their own public comments about their CapEx. And you will have seen what the Americans have said about 2024. CapEx again, as I said earlier, only 50% of the North American 5G sites are currently -- have been upgraded to mid-band. So there's a lot of work to do there as well. I'm not going to get into '24 guidance today. What we said in the progress update after Q4 obviously remains that our very clear ambition is to drive Mobile Networks into double-digit profitability.

And maybe my follow-up would be on Europe, specifically, and your market share there with Huawei getting into maybe removed from part of the network accelerating in some regions like Germany potentially. How is your market share now? I mean what is your market share in Europe today? And what is your market share in the deals you signed? I mean, do you see strong drivers? Is it like visible really in your P&L, this dynamic? And how long it would last, would be great.

Do you have, Marco, the market share there?

Yes. What comes to 4G, 5G market share. So we believe that in Europe, we are around 29%, 30%, somewhere there. And just like we said earlier, on those deals where customers have changed the vendor base, we have won about half of those. So we believe we have a very good position. And just you saw as well in quarter 1, we continue to grow in Europe again in Mobile Networks side with a very good growth rate. And this is evidence that we are taking market share in Europe as well.

When you take -- if you take Dell'Oro figures in Europe, which we do not believe that would be far from the truth, they are saying, for the -- this is at the end '22, 29.2%, and that is 2.9 percentage points increase in 1 year. So in Mobile Networks, we now have 4 to 5 quarters behind us where we have taken market share globally outside of China. So this is a strong proof point of the return on investment that we are getting on the R&D. And of course, the latest product, which further increases our competitiveness, which is the Habrok generation that we launched in Mobile World Congress, that has not even started to deliver yet.

Thanks, Francois. We'll take our next question from Joseph Zhou from Redburn.

I have two. I will go one at a time. And firstly, just on your Network Infrastructure business, which had a very strong margin again this quarter but with the lower margin optical business grew the strongest. And how should we understand the very strong year-on-year margin progression this quarter given the -- I would argue, the slightly unfavorable mix for that division? Which business within NI had the strongest improvement in margin?

Well, first of all, because we now have great top line growth in IP Networks, 13% constant currency growth, and because that business has the best profitability in that business group, so that as such drives the margin. So that's the mix between businesses inside NI. But I also would like to highlight Optical Networks because there is -- as in all these businesses, there is some heavy R&D costs and then there is SG&A as well. So when you have, like in this quarter, 45% growth, that delivers a pretty healthy operating margin leverage as well. So those would be the 2 things that I would highlight as drivers for the NI -- behind the NI margin.

Did you have any follow-up?

Yes. My follow-up is we have seen quite a significant decoupling of growth trajectory between wireless and wireless network equipment spend in North America. And would you attribute this more to the high inventory level related to 5G or simply operators is shifting CapEx towards wired following the big 5G rollout in North America? Obviously, I think it's probably both, but would you attribute this more to customer destocking?

Yes. The latter one is something that actually operators should comment. But we are seeing -- as we commented in the report, we saw strong development in Network Infrastructure in North America at the same time when we saw weakness in Mobile Networks. And again, that Mobile Networks weakness, in a way, is a double whammy that you have both slightly slower construction pace and then you have inventory depletion. So it's a combination of the 2. But right now, we are not seeing this in the same way in NI.

Thank you. We'll take our question Stefan Slowinski from BNP Paribas.

Just wanted to get a clarification on the comments during the prepared remarks around the net cash longer term only required to be 15% of sales. Did you say that was after 2024 that you would look to put that into place? And I think you said you could do that either through substantial M&A or buybacks. So just kind of wondering how you would decide between the 2? And if it was more substantial M&A, what areas you might be considering for that? So that would be my first question. And just a quick follow-up is considering some of the early signs we're seeing about a broadening weaker macro environment, just wondering if there's any more cost-cutting initiatives that you're taking or could take in order to ensure that margins are preserved going into next year?

Thank you, Stefan. And when it comes to the capital management policy, I would say that, first of all, we want to sustain and secure that we have a solid overall financial position. And what comes to timing of reaching the target, we've said that we don't take any immediate actions due to the fact that we see a growth in 2023, which is tying up more working capital. At the same time, there's macroeconomic uncertainties as well. And that's why we said that we will look into that -- look into taking actions in 2024, where we expect that cash generation will improve. When it comes to M&A activities, we've said bolt-on acquisitions could be one way and/or more returns to shareholders. We haven't specified more than that. And when comes to M&A, in general, we don't have any plans to make any big acquisitions. It's more targeted to secure our technology leadership and offering towards our customers and looking those kind of acquisitions.

And then just to follow up. I mean, of course, you should not forget that we just increased our dividend from EUR 0.02 to EUR 0.03 per quarter. That's a 50% increase. And then we are continuing into the second EUR 300 million of the EUR 600 million buyback program. So we are returning. And remember, this free cash flow conversion guidance of 20% to 50% of net sales this year is something that we need to keep in mind as well.

We'll take our next question from Richard -- sorry, we haven't answered the question on restructuring.

Sorry, what was the question?

Stefan, I guess if you want to repeat it, but if I recall it was...

Cost discipline. Of course, yes, sorry.

Any cost-cutting initiatives either underway or could be planned if the macro environment does continue to weaken throughout the year to preserve margins for next year.

First of all, we still have this EUR 600 million program ongoing that we said that would continue until the end of 2023. So it means that we are continuously trimming the cost base. So this is even without any new announcements or anything like that. This is something that we do all the time. And the businesses have full responsibility for keeping their cost base in shape. And of course, the businesses and we, in group management, we are paying a lot of attention to the macro environment, and we are adjusting the cost management accordingly. We are not making any new announcements today on this one, but I just want to highlight that this does not mean that there would not be actions ongoing all the time.

Next question from Richard Kramer from Arete.

Pekka, can you give us a little bit more visibility or update us on the sustainability of that growth rate in enterprise, given the new customer wins? We've seen that have fits and starts in the past where you had a very good growth rate 1 quarter and then it tailed off the quarter after. And maybe can you give us a bit more detail of -- you mentioned web scale hyperscalers. Can you give us a sense of what portion of that enterprise business is now focused on the very large hyperscalers versus the long tail of private wireless and enterprise customers? And then I have a quick follow-up.

It is -- the web scale part, we are not disclosing it in monetary terms, but what I can say is that it is still a fairly small part of the overall enterprise business, which obviously was the total enterprise, EUR 2 billion last year. Am I going to promise that the 62% growth rate we will sustain? No. But remember, Q4 was -- what was it, 49%, I think. But we have -- and Q3 was -- was it over 20%? Yes, 20-something percent. So we started to have some track record on this. And of course, this is important because -- and we said that we will have a strong double-digit full year growth this year. But again, there could be jumps up and down also in individual quarters because some of the deliveries can also have some bulkiness because there is -- remember, in addition to the web scale deals and campus networks, there is also wide area private networks in that mix for authorities, for example, for utilities and so on. So you could see some lumpiness, but the general direction is good. We have a strong pipeline of new opportunities. And of course, the difference between this customer segment and the CSP segment is that here, it's really up to us and take it. I mean, there are thousands and thousands of potential customers, whereas on the CSP side, we are fairly dependent on a small number of customers.

And then a quick follow-up for Marco. Very helpful Slide #11 with the bridge of Nokia Technologies. But with such a huge amount sitting in these smartphone agreement renewals, can you just help us understand how you're handling the costs of all that litigation against those renewals right now? Are those costs being taken through the P&L today? Or are they being put off until an agreement is reached and that might have a big impact on profitability when you finally are able to reach terms?

Yes. Thank you. Yes, we take litigation cost in our P&L immediately. And now, of course, when we have these 2 litigations, you see a little bit more litigation costs. But of course, we have other costs in the technologies, OpEx as well, as we have R&D different patent portfolio cost, business development and other licensing-related expenses that we have there. But we always take those immediately in our P&L.

We'll take our next question from Sébastien Sztabowicz from Kepler Cheuvreux. Sébastien Sztabowicz: One follow-up and one question previously on the market growth or market outlook for 2024. You answered on the Mobile Networks, but what is your view on the market trends for NI and the different business within NI? And then also on CNS, how do you see the demand developing beyond 2023? And the second question would be on this patent litigation with Chinese smartphone OEM. Could you please make an update and tell us a little bit where your litigation are standing right now? Have you made any kind of progress? How the situation is evolving on these patent litigations?

Okay. If I take the first one and Marco takes the second one. So NI market growth rates, we actually gave some estimations in connection with the Q4 progress update. IP Networks CAGR, 3%. Fixed Networks CAGR, 4%. And Optical Networks CAGR, 2%. So those -- these would be the overall market growth rates. We have not looked into specifically 2024 at this time. These are kind of longer-term underlying growth rates. Of course, what means longer term, in this case, 2022, '25, that's what we said in January for the next 3 years CAGR at constant currency. That's what we are looking at, at the moment. But of course, this is something that we are following up all the time depending on how the general economy develops from here.

And when it comes to the litigations on those two cases I suppose you are referring to, we have continuous wins also in different jurisdictions. The latest one came from Germany, where we had a positive outcome from -- against Vivo. And then when it comes to OPPO, I think the latest one came from U.K. where the court ruled in our favor there as well. And when it comes to court in Brazil, they also granted us a preliminary injunction there. So we -- step by step, we are proceeding here when it comes to the litigation proceedings. And -- but at the same time, of course, we continue to negotiate with both parties to find suitable solution. But as we said before, we are not targeting any specific timeline here. We want to defend the value of our portfolio because we believe that we have very good portfolio, and we are following those international rules when it comes to friend in these as well.

Thank you, Sébastien. We'll take our next question from Sami Sarkamies from Danske Bank.

Can you please talk about developments at CNS in Q1? You did flag weak mix with higher hardware sales. Is this temporary in nature? And is it related to 5G core or the enterprise business? And then maybe as a follow-up, what is the margin impact from strong enterprise growth during the past few quarters on CNS?

Okay. Thank you, Sami. First of all, I would say that the margin shift that we had in quarter 1 is not due to the enterprise sales. It is purely, I would say, mix between software and hardware. And in quarter 1, we had larger share of hardware shipments than we normally have and a little bit lower software. So this was the reason. And we expect the mix having a little bit headwind in quarter 2 as well. But remember also, this is a software type of business. So some normal seasonality is that most of the profit is always coming towards the end of the year. And this is exactly what we expect here as well, and that's why we have the full year guidance. And we reiterated that again as well that when it comes to our guidance assumptions, specifically for CNS, we assume to have 5.5% to 8.5% operating margin for the full year.

We'll take our last question from Sandeep Deshpande from JPMorgan.

My question is -- sorry, I don't know whether this was asked before, but is the weakness -- I mean, you've seen 2 consecutive quarters in which your gross margin has been impacted in Mobile Networks. I mean you talked just now about software hardware mix. Is this what is going to change into the second half of the year, which will improve the margin in Mobile Networks because geographically, the mix has changed and that is probably not going to change into the second half of the year?

Well, the reason for the gross margin drop is specifically the geographical mix and that was actually there already in Q4 last year. So we now have 2 quarters of weaker volumes in North America in Mobile Networks. And that is expected to continue, as I said earlier, through the second quarter. And then we are expecting a recovery in the second half of the year, which then explains why we are maintaining the 7% to 10% full year operating margin guidance for Mobile Networks.

So the improvement in Mobile Networks, Pekka, in the second half will occur because, again, geographical mix shift rather than some adjustment associated with software hardware as such really?

That is correct. This is not a software hardware question. This is a geographical mix or I should say, specifically, North American volume question, where we expect recovery in the second half of the year.

And the software hardware that was on the CNS, Cloud and Network Services.

Thanks, Sandeep. And thank you, everyone, for joining us today. This does conclude 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 the Investor Relations website. Thank you for joining us.

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