Nokia 2003 Annual Report Download - page 24

Regulatory and technological changes also have played a role in our success. Deregulation of the
Finnish and European telecommunications industries since the late 1980s stimulated competition
and boosted customer demand. Nokia introduced the world’s first car phone for the Nordic Mobile
Telephone analogue standard in 1982. It weighed approximately 10 kilograms, or 22 pounds, and
was used primarily as a business tool. The technological breakthrough of GSM, which could carry
data in addition to high quality sound, was followed by the European resolution in 1987 to adopt
GSM as the European digital standard by July 1, 1991. The first GSM call was made with a Nokia
phone over the Nokia-built network of an operator called Radiolinja, and in the same year, Nokia
won contracts to supply GSM networks in nine other European countries. During this period, GSM
was also established as a standard in several Asian countries, opening important new markets for
us. Our expertise in GSM technology has laid the foundation for our subsequent success in the
broader mobile communications industry, as Nokia has introduced mobile phones and devices
across all major cellular standards.
Since the early 1990s, the penetration of mobile telecommunications has grown rapidly, and the
global subscriber base is currently estimated at 1.3 billion subscriptions. Our mobile phones and
devices are now used by virtually every demographic segment of the population, not only as a
business or communications device, but also as a source of entertainment and even a fashion
accessory. Moreover, mobile communications is continuing to evolve, finding new opportunities in
imaging, games, entertainment, media and enterprise use. This is taking place as the mobile
communications, information technology and media industries are in the process of converging
into one broader industry, the mobility industry.
Towards the end of 2003, Nokia took the decision, effective January 1, 2004, to reorganize its
structure in a move to further align the company’s overall structure with its strategy. As a result,
we began 2004 with a strong organizational base from which to make progress in expanding
mobile voice, driving consumer multimedia, and bringing extended mobility to enterprises.
Today, as a result of our reorganization effective January 1, 2004, Nokia consists of four business
groups: Mobile Phones; Multimedia; Networks; and Enterprise Solutions. In addition, our
organizational structure includes three horizontal groups: Customer and Market Operations;
Technology Platforms; and Research, Venturing and Business Infrastructure. For a detailed
description of our business, see ‘‘Item 4.B Business Overview.’’
Nokia is not a capital-intensive company in terms of fixed assets, but rather invests in research
and development, building the Nokia brand and marketing. We expect the amount of capital
expenditure during 2004 to be somewhat higher than in 2003 and to be funded from our cash
flow from operations. During 2003, Nokia’s capital expenditures totaled EUR 432 million, compared
with EUR 432 million in 2002 and EUR 1 041 million in 2001. For further information regarding
capital expenditures see ‘‘Item 5.A Operating Results’’ and for a description of capital expenditures
by business segment see Note 2 to our consolidated financial statements included in Item 18 of
this Form 20-F.
Nokia maintains listings on five major securities exchanges. Our principal executive office is
located at Keilalahdentie 4, P.O. Box 226, FIN-00045 Nokia Group, Espoo, Finland and our telephone
number is [phone]. Our agent in the United States is Nokia Inc., 6000 Connection
Drive, Irving, Texas, 75039, and its telephone number is [phone].
4.B Business Overview
Industry Overview
The mobile communications industry and the technologies that it exploits are undergoing
significant changes. First, the mobile communications, information technology and media
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