Fitch downgrades Nokia to 'BB+'

"Fitch Ratings has downgraded Nokia's Long-term Issuer Default Rating (IDR) and senior unsecured rating to 'BB+' from 'BBB-'.

The outlook on the Long-term IDR is Negative", a press release issued by Fitch ratings stated.

"The downgrade reflects Fitch's view that the deterioration in the company's core Devices and Services division in Q1, together with the company guidance of three percent non-IFRS operating margins or below for the division for Q2 and the general lack of visibility beyond this point, means Nokia's profile is no longer commensurate with an investment grade rating.

To avoid further negative rating action, Nokia needs to demonstrate substantial improvements over Q312, Q412 and 2013. Fitch believes that Nokia needs to stabilise revenue and be capable of generating low-single digit non-IFRS operating profit margins and positive pre-dividend free cash flow, if Fitch is to affirm the rating at the 'BB+' rating level. Given the potential headwinds facing the company, Fitch is currently not convinced that Nokia can attain this over the course of 18 months.