Finnish telecoms group Nokia has said it will cut a further 900 jobs across Europe, as demand in the mobile phone sector continues to fall.

The company said the cuts mainly affected maintenance and network delivery workers responsible for installing new systems.

This sends a gloomy signal for the overall outlook for the infrastructure business

Lauri Rosendahl, Deutsche Bank

About 5% of Nokia Networks' staff will go in all.

Up to 80 jobs might go in the UK but Nokia told BBC Business Online that it hoped the eventual number would be lower.

Analysts were unsurprised by the move, saying Nokia had so far resisted the larger culls of some of its rivals.

But they said the news indicated that the downturn in the industry would run on for at least another two years.

More bad news ahead

The network division develops and installs new methods for data delivery such as the high speed 3G and GPRS mobile telecoms systems.

Signs that the unit was struggling were clear last month, when Nokia reported a 46% rise in overall profits but a 22% drop in sales of network equipment.

This is the largest number of redundancies since July 2001, when it reduced staff by 4,600, but still significantly lower than a number of its rivals.

Swedish group Ericsson, for example, has almost halved its staff from 2001 levels.

Analyst Lauri Rosendahl at Deutsche Bank said the cuts came as no surprise but added "of course this sends a gloomy signal for the infrastructure business at least in the short term, and you could say that no recovery seems to be in sight".

'Ahead of the curve'

Nokia itself downgraded estimates for its business last month and said it expected the network market to decline by about 10% in 2002.

Analysts at Lehman Brothers have said in a research note that they expect the amount of money spent on wireless equipment to fall by 20% in 2002 compared with 2001, and by another 10% in 2003.

The general climate has prompted analysts to see Nokia's move as a prudent one. Lauri Rosendahl added: "I would say they are staying ahead of the curve".