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Nokia Networks Moves a Step Closer to Alcatel-Lucent Buy - Analyst Blog

Nokia Networks, a division of Nokia Corp.NOK recently received the support of the broad of directors of Alcatel-LucentALU for its proposed acquisition of the latter. In Apr 2015, Nokia Networks had entered into a definitive agreement with Alcatel-Lucent for its full acquisition for a total consideration of Euro 15.6 billion (approximately $16.6 billion).

The deal is expected to close by mid-2016 subject to approval by both the company's shareholders and the regulatory authorities. Notably, Nokia shareholders will command a 66.5% stake in the merged entity while Alcatel-Lucent shareholders will hold the remaining 33.5%.

Several analysts have estimated that the combined Nokia and Alcatel-Lucent will command about 35% of the global wireless infrastructure market share, much closer to Ericsson AB's ERIC estimated 40% hold and far ahead of Huawei Technologies Co. Ltd.'s 20% share.

Acquisition of the wireless business of Alcatel-Lucent will significantly strengthen Nokia Networks' foothold in North America. Top U.S. telecom operators, namely, Verizon Communications Inc. VZ and AT&T Inc. T are major customers of Alcatel-Lucent.

Notably, in 2014, the wireless division of Alcatel-Lucent generated around $5 billion in sales. Out of the total, Verizon and AT&T jointly contributed more than 25%. Additionally, Alcatel-Lucent has a strong presence in China while Nokia Networks enjoys considerable dominance in Europe and Asia.

The merged entity can effectively capitalize on emerging Internet-of-thing (IoT) platform and offer triple-play voice, video and data solutions throughout the world. The core focus areas will be next-generation 5G wireless technology, IP and software, defined networking, cloud-based solutions, big data analytics, and sensors and imaging.

A full takeover of Alcatel-Lucent by Nokia will create a network solutions behemoth in the industry with a significant global customer base and solid operational efficiencies. Nokia Networks boasts strong technical efficiency in professional managed services, customer experience management together with a rich portfolio of mobile broadband infrastructure and 4G LTE networks.

On the other hand, Alcatel-Lucent enjoys a relative advantage in IP-based products, optical networking, cloud computing/software-defined networking, fixed broadband network and professional services.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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