Telecom equipment and software major Nokia today announced the acquisition of 100 percent stake of Alcatel-Lucent.
The 100 percent stake in Alcatel-Lucent enables Nokia to eliminate complexity and costs of two separate corporate structures.
Earlier this year, Nokia and Alcatel-Lucent started working as a single business unit taking on the struggling Ericsson and Chinese telecom groups Huawei and ZTE.
Nokia is already leveraging extended scale and scope to new customers in new sectors to meet connectivity demands.
Before acquiring Alcatel-Lucent, Nokia said it would focus on mobile broadband technologies to drive the growth. The acquisition of Alcatel-Lucent prompted Nokia to enhance business areas. Some of the businesses of Alcatel-Lucent were not suitable for Nokia’s long-term growth plans.
Nokia, which has enough funds after selling phone business, will now try to build business on 5G related infrastructure and IoT demands. Analysts say Nokia will take 1-2 years to revive the networking business due to slowdown in the global market.
Nokia’s broad product portfolio, spanning fixed and mobile technologies, puts it in driver’s seat in an ever-more connected world. At present, Nokia is evaluating options on Alcatel-Lucent’s submarine business.
Nokia is also struggling to reduce a significant number of employees as a result of the merger with Alcatel-Lucent.
“Only 19 months after announcing plans to purchase Alcatel-Lucent in April 2015, Nokia’s progress in integrating and operating as a combined company has put it in good stead to meet the opportunities of an increasingly connected world,” said Nokia.
In 2013, Nokia purchased Siemens’ 50 percent stake in Nokia Siemens Networks as part of a three-year transformation. Nokia also sold the Devices & Services to Microsoft and mapping businesses in the next two years to an automobile consortium. Microsoft faced the music after buying the phone business. Both Apple and Samsung are struggling to fine tune their smartphone business.
“While we have been operating as a combined company already since January 2016, we should take a moment to recognize the significance of today’s news. This acquisition was smoother than many observers thought possible, and I would like to thank all our employees and partners who made it happen,” said Nokia CEO Rajeev Suri.
The company has accelerated synergy plans for the deal, and expects EUR 1.2 billion in annual cost savings to be achieved in full-year 2018.
In 2016, Nokia acquired Withings and Gainspeed. It also announced a brand-licensing deal with HMD and expanded intellectual property cross-licensing agreement with Samsung.
The main challenge for Nokia is to turn around its networking business. During the third quarter of 2016, Nokia Networks sales dipped 12 percent.
Baburajan K
