Nokia's credit upgrade lands as telecom capex goes flat

A credit upgrade built on flat carrier spending

Telecom operators still generated 72% of Nokia's net sales in the first nine months of 2026. Moody's framed the upgrade around optical and IP network orders from hyperscalers. It expects adjusted operating margin of about 5% in 2026, 9% in 2027 and 11.5% in 2028. That matters because carrier budgets set the floor for Nokia's sales. The rating case does not assume a carrier spending rebound.

Near-term cash is another matter. Restructuring costs rose to roughly €1.1 billion for 2026 against an initial €250 million estimate.

Nokia is winding down in China and cutting costs in Europe. Moody's sees free cash flow after dividends at negative €370 million this year. The balance sheet carries the upgrade for now. Nokia holds €4.7 billion in adjusted cash and €2.37 billion in undrawn credit and European Investment Bank facilities. Moody's guides gross debt-to-EBITDA from 1.9x at end-2026 to 1.3x by 2028. That is the cushion behind a rating that still depends on carrier budgets.

Mexico: less coverage, more fibre

Mexico's third-quarter numbers show the same discipline. América Móvil invested 75.900 billion pesos (US$4bn) in the nine months to September at the regional level.

That was 10.6% less than the 84.900bn pesos in the same period of 2025, a drop mainly explained by an exchange rate effect. Televisa invested 2,992.6 million pesos in the quarter, 18.2% less in pesos and 11.7% less in dollars year on year. It migrated more than 1.3 million homes to fibre-to-the-home but added only 7,700 households to a network passing more than 20.1 million.

Megacable held quarterly investment at 2.372bn pesos, practically the same as a year earlier. That is its lowest third quarter since expansion began.

Year-to-date capex is 23.2% of revenue, against 40.7% in the first nine months of 2023. Megacable passes 19.9 million homes and has 89% of subscribers on fibre, up from 82%. Total Play did not disclose quarterly capex. CEO Eduardo Kuri said 143,340 residential subscriber additions came without extra geographic investment, while homes passed rose to 19.5 million from 17.6 million. The pattern is consistent: operators are adding customers and fibre lines while holding back on new footprint. That shift shows up across the main operators.

Consolidation runs alongside the cuts

The cuts are happening in a market being redrawn. On 13 October, a consortium split equally between Televisa and Fintech Holdings agreed to buy AT&T's mobile business in Mexico.

The price is US$2 billion, subject to adjustments and regulatory approval. Televisa plans to contribute about US$400 million at closing, scheduled for the first quarter of 2027. That would give it its own mobile network for a business that today runs as an MVNO with 888,000 lines, 59% more than a year earlier. Axtel, focused on the corporate segment, also did not disclose its investment. Its board received separate proposals from 4 Tech Plus and Transtelco Holding to buy up to 100% of the company. It refinanced a US$65 million loan with Export Development Canada, extending the term to three years.

What comes next: edge AI and 2027 budgets

América Móvil executives said they expect investment at a similar level in 2027. The budget is not closed. It keeps a forecast of around US$7 billion a year.

Where the next slice of spending goes is open. Nvidia's edge AI work involves AT&T, Charter Communications, Cisco, Nokia, SoftBank, Telefónica and T-Mobile, with metro sites rather than towers seen as the clearest near-term opportunity. David Duggal, CEO of EnterpriseWeb, said power and thermal concerns make AI on a tower or cell site a Catch-22 situation. The GPU needs a lot more power, he said, and more power means more heat. That constraint shapes where operators can put compute first.

In Mexico, the upgrade story is mostly fibre. COO Oscar Von Hauske said 94% of fixed broadband customers in Mexico are already connected with fibre.

CEO Daniel Hajj said Telcel is the country's only operator with a 5G network and good-quality coverage.