TL;DR · 30-second read
The Short Version
Nokia, the Finnish company behind much of the equipment that runs phone and internet networks, is teaming up with satellite company ICEYE. Together they plan to build communication satellites that governments control themselves. The goal is to keep soldiers, border guards and emergency crews connected when ground networks are knocked out. The first satellites are planned for 2028.
The satellites will not change Nokia’s finances soon. Investors currently pay about 77 times the company’s yearly profit for its shares. That price leans on Nokia more than tripling the profit it keeps from each euro of sales, mostly through software, cloud and artificial-intelligence networking, not satellites.
Simply Wall St reported that ICEYE and Nokia Oyj have announced a partnership to build secure, sovereign broadband satellite communication systems in low Earth orbit (LEO) for governments. The systems target defense, border security, emergency services and disaster response, and the first satellites are planned for launch in 2028. The pairing combines Nokia’s secure networking and defense-focused portfolio with ICEYE’s sovereign satellite mission expertise.
The partnership lands against a demanding set of expectations for Nokia. Consensus estimates assume 4.8% annual revenue growth over three years, an operating profitability shift from 3.4% to 11.2%, and earnings rising from €702.0 million today to €2.6 billion by 2029. The shares trade at 76.6 times current earnings.
Executive Summary
Nokia and ICEYE are building sovereign broadband satellite systems for governments: networks a state can own and control rather than rent from a commercial provider. These systems are meant to keep working when traditional terrestrial networks are unavailable or compromised. The first launches are planned for 2028, which puts the partnership squarely in the category of long-dated strategic positioning rather than near-term revenue.
That timing is what makes the deal analytically interesting. Nokia’s valuation already assumes a large earnings recovery by 2029. The satellites arrive too late to do much of that work. Whatever justifies a 76.6x price-to-earnings multiple (the share price divided by a year of per-share profit) has to come from margin repair in Nokia’s existing network, cloud and software businesses. This includes the cloud and AI domains where Nokia competes as a challenger.
For government buyers and network planners, the more durable signal is architectural. Sovereignty requirements that have shaped terrestrial fiber and mobile procurement are now being written into the satellite layer as well.
Sovereignty Moves From the Ground Into Orbit
Governments have spent years tightening control over the networks that carry sensitive traffic. That has meant specifying who builds them, who operates them and where the data travels. The Nokia and ICEYE partnership extends that logic upward. A sovereign LEO system is a constellation of satellites orbiting relatively close to Earth, operated under a government’s own control. It gives defense, border and emergency agencies a communications path that does not depend on ground infrastructure that may be damaged, congested or compromised.
In practice, such a system works as a resilient alternate route. It carries traffic between field units and core networks when fiber or mobile backhaul (the links that connect local sites to the wider network) is unavailable. For planners, this means sovereign requirements no longer stop at the edge of the terrestrial network. A government that insists on controlled fiber and controlled mobile cores will increasingly expect the same of its satellite links. Vendors that can offer both layers under one security model gain an advantage in those procurements.
Nokia’s contribution is its secure networking and defense portfolio. ICEYE brings sovereign satellite mission expertise. The combination is coherent on paper. The practical test will be whether the two can deliver an integrated system that governments buy as a single sovereign capability.
Why 2028 Satellites Cannot Carry a 76.6x Multiple
Consider the mechanism behind Nokia’s valuation. Current profit is €702.0 million on a 3.4% margin, and the shares trade at 76.6 times those earnings. The US Communications industry, by comparison, trades at 25.7x. Consensus forecasts close that gap through earnings growth, not satellites. They project revenue of €23.5 billion and earnings of €2.6 billion by 2029, with margins reaching 11.2%. On those forecasts, matching analyst scenarios would put Nokia on 22.0x earnings in 2029.
That is a near-quadrupling of profit within roughly three years. The ICEYE satellites are not scheduled to launch until 2028. Even on schedule, an initial constellation entering service that late can contribute little to 2029 earnings. Viewed against the forecasts, the partnership is best read as an early option on government-grade connectivity, not a visible earnings driver in the next few years. Consensus fair-value work still points to a 21% potential downside from the current price. In other words, even the full forecast margin recovery does not obviously support today’s multiple.
Per-share math makes the bar higher still. Forecasts assume the share count rises 3.42% a year for three years, which spreads any profit increase across more stock. The figures are discounted at a 7.87% rate to reach today’s implied value. For investors, the conclusion is straightforward. The satellite deal adds strategic breadth, but the multiple depends on margin expansion elsewhere.
Where the Margin Has to Come From: Cloud, Software and AI
To reach 11.2% margins, Nokia’s higher-margin segments and software-heavy offerings must carry more weight in the portfolio. Those include Network Infrastructure, Cloud and Network Services, and patent licensing. The recent Zain KSA rollout of Nokia Deepfield Cloud Intelligence illustrates the model. This network analytics software gives operators visibility and control when traffic spikes or incidents hit critical services. Recurring software and analytics revenue of this kind can lift the margin mix if execution holds.
Nokia’s position in these markets cuts both ways. The company is a challenger in some cloud and AI domains. If competitors offer similar analytics at lower prices or with deeper hyperscaler partnerships (ties to the giant cloud operators such as those building AI data centers), Nokia may capture less of the benefit. The most optimistic published scenario leans hard on exactly this AI exposure. It projects revenue of €26.1 billion and earnings of €3.5 billion by 2029, assuming faster cloud and AI adoption. The gap between that case and the €2.6 billion consensus is, in effect, the AI networking question.
The Mobile Drag Beneath the Story
The near-term swing factor remains Mobile Networks, a segment facing competition and flat demand. Investors are watching for faster growth in cloud, fiber and private wireless to offset that pressure. Currency headwinds, pricing pressure, market share loss and earnings volatility are all live risks to the forecast path. None of these is addressed by a satellite program that begins launching in 2028. The ICEYE deal broadens what Nokia can sell to governments, but the investment case over the next three years still rests on the terrestrial and software businesses.
Background
Nokia Oyj is a Finland-based supplier of mobile, fixed and cloud network solutions, selling into North and Latin America, Greater China, India, Asia Pacific, Europe, the Middle East and Africa. Its business spans Mobile Networks, Network Infrastructure, Cloud and Network Services, and a patent licensing operation. Mobile Networks has faced competition and flat demand, so the company’s growth ambitions increasingly center on cloud, fiber, private wireless and software.
Low Earth orbit constellations have become a major focus of the communications industry because they can deliver broadband-like service from space. Governments, meanwhile, have pushed for sovereign control over the networks that carry defense and emergency traffic. The Nokia and ICEYE partnership sits where these two trends meet. Source: Is Government LEO Partnership Altering The Investment Case For Nokia (HLSE:NOKIA)? (Simply Wall St) — on the Nokia and ICEYE sovereign LEO satellite partnership and the analyst forecasts behind Nokia’s valuation.Sources