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Nokia on Thursday reported operating profit below market expectations for the first quarter and the Finnish company said it was seeing signs of customer spending slowing down.

However, it kept its full-year outlook unchanged and said it expects profitability in the second half of the year to be stronger than the first half.

First-quarter comparable operating profit fell to 479 million euros ($524.94 million) from 583 million euros last year, missing the 532.4 million euro forecast of analysts polled by Refinitiv.

Nokia and Ericsson have been depending on sales growth in India where telecom operators are building a new 5G network to offset a slowdown in high-margin markets such as the United States.

"What we are seeing in India at the moment is the fastest 5G rollout the world has ever seen," Nokia CEO Pekka Lundmark said in an interview.

India, where Nokia counts Reliance Jio and Bharti Airtel as customers, now account for 15% of its revenue.

Net sales grew 10% in the quarter to 5.86 billion euros, beating estimates of 5.72 billion euros, Nokia said.

Lundmark expects some recovery in the North American market in the second half of the year.

Comparable operating margin fell to 8.2% from 10.9%. It forecast margins of 11.5% to 14% for 2023.

Apart from getting big contracts from telecom operators, Nokia is also diversifying its base to industrial customers who are setting up private 5G networks at power plants to mines.

The soft performance in Nokia's patent licensing business was the key reason for the earnings miss, Danske Bank Credit Research analyst Mads Lindegaard Rosendal said.

Lundmark attributed it to legal fights with Oppo and Vivo.

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