Daniel Djurberg: Yes, I can take a quick one on Mobile Networks. Do you or did you have any contract breach [by] (ph) AT&T or something in the numbers or should expect anything like that to materialize ahead?
Pekka Lundmark: There were no such elements in the Q1 numbers. When it comes to the AT&T situation, we do not have any updates at this stage. Negotiations are still ongoing with respect to the conclusion of the existing contract.
David Mulholland: Thanks, Daniel. We’ll take our next question from Alexander Duval from Goldman Sachs. Alex, please go ahead.
Alexander Duval: Yes, thanks so much, David, for the question. And firstly, you referenced O-RAN solutions in your prepared remarks. I think one of your competitors is talking about seeing increased market activity in that area. So, I was just curious is you’re seeing a greater prevalence of O-RAN requests in deals, discussions and, if so, whether that have any implications for your R&D roadmap? And second, well, just to come back on NI, just wondered if you could help understand the degree of visibility you have there? Obviously, you’ve talked about some improvement in orders. However, last year, I think there was a sort of very positive outlook at the start of the year. And then, through the year, things became more tricky on that side. So, just wondered if something has changed this year? Which would be the key positive drivers that give you confidence on the visibility there? Many thanks.
Pekka Lundmark: Okay, thank you. If I take the O-RAN question first, so the interest is gradually increasing. And I think it’s a good thing. As you know, we have been, from the beginning, a strong supporter of O-RAN, the strongest contributor to the standard. We have several real customer implementations, commercial implementations underway. And we are clearly the leader as to the company — all the companies who have tested and demonstrated interoperability between us — our solutions and other vendor solutions. So, we are welcoming the increased interest in O-RAN, and we believe that we are fully competitive, regardless of which of the scenarios in terms of O-RAN speed will materialize. Of course, part of this is also the other aspect of network evolution development, which is the cloudification of the — especially the baseband functions of the network.
And there, I can say the same thing. This is, of course, a different thing from the open fronthaul interface that O-RAN will bring, but often these two will coexist in the future, and we are equally pleased to be clearly one of the leaders in the Cloud RAN development as well, exciting initiatives going on with multiple customers in different parts of the world. Then when it comes to the NI, of course, a very important thing to note there, which we have said earlier, but I do repeat it also here, is that 2023 was kind of an exception because there was in Q1, as you remember, more than 15% operating margin in NI because of the catch-up deliveries that we had — that went — that came from the supply chain shortages that affected volumes in 2022.
So, there were two things then that happened in ’23. Operators network build out pace slow down and on top of that, they consumed a lot of the inventories that they had built and then we were recovering from the supply chain situation. So, the dynamics of 2023 were really, really exceptional. And this year we are moving back to a much more kind of normal seasonality where Q1 is the weakest and then gradually it improves towards a stronger second-half and then Q4 being the strongest. So, this is what we are expecting this year and the good thing is that the order trends that we see in NI, they started to support this already in Q4 last year, and those trends have continued in the first quarter of this year, especially in fixed networks in North America, in fixed wireless access, for example, with a significant customer in Asia Pacific.
In IP networks, we continue to see tailwinds in the second-half of the year from enterprise and web scale winds and as I said it now seems that in optical networks the recovery could take a little bit longer than originally expected. This is consistent with what some of our optical networks competitors have commented. And then, maybe finally on submarine networks, there we are executing on a strong backlog. So, the weak delivery, so weak top-line in Q1 was more related to project timing impacting Q1 than the strength of the order backlog. And in addition to the order backlog in submarine, there is a strong pipeline of new opportunities as well. So, maybe there is some ammunition to deal with, address your question with these things that I went through.
David Mulholland: Thanks, Alex. We’ll take our next question from Sebastien Sztabowicz from Kepler Cheuvreux. Sebastien, please go ahead.
Sebastien Sztabowicz: Yes, hello everyone. On mobile networks, you started also the year on a very soft path and you need to accelerate strongly your revenue growth in the next two quarters to reach your guidance, minus 10, minus 15. What kind of visibility do you have on the acceleration of sales growth in mobile networks? And the second question is on the U.S. market, specifically in mobile. It seems the environment remained depressed in the first quarter. When do you expect the inventory correction to be completed or the demand to be back in the U.S. market in mobile networks? Thank you.
Pekka Lundmark: The Q1 was of course very weak from a top line perspective. This was largely because of India. And again here you have to remember what happened last year, especially the first-half of 2023 saw a massive 5G deployment in India. Now those volumes have normalized. We do expect that the low volumes in both India and North America in Q1 will improve then in the coming quarters and this is based on obviously a combination of the visibility we have through order backlog and then also the discussions on the pipeline that we have with these customers. So, we do maintain the 10% to 15% decline expectation in mobile networks for the year. The second question was?
Sebastien Sztabowicz: The inventory levels in North America.
Pekka Lundmark: Do you want to take that one Marco?
