Nokia discussing possible tie-up with Alcatel-Lucent

by CXOtoday News Desk    Sep 27, 2013

nokia deal

After selling off its handset business to Microsoft, Nokia is now discussing a possible tie-up with French company and one time rival Alcatel-Lucent in order to keep up with the growth momentum. According to a recent report, a source close to the company said, “Nokia held on and off discussions about buying Alcatel’s wireless business as recently as late 2012 and that the two companies could still come back to the table.” Speculation over a combination between Nokia and Alcatel-Lucent goes back several years, as both the companies struggled to compete with handset maker Ericsson and several low priced network equipment rivals in the Asian market such as Huawei and ZTE, states Reuters.

Microsoft announced on September 3 that it will buy Nokia’s handset business and license its patents for $7.3 billion. Likewise, Nokia said it will evaluate strategy for its remaining operations before the deal closes, some of these include a mapping software unit and a portfolio of patents. It is known that Nokia that dominated the global handset market was feeling threatened by competition, especially from Samsung and Apple and even smaller players from various domestic markets. The source said that Nokia, under the leadership of interim CEO Risto Siilasmaa, has already begun internal discussions on future strategy, and that a decision could be months away. However, a senior official of the company mentioned that Nokia is in a “period of reflection trying to figure out what they want to do. Formal dialogues, if any, are likely to be held after Nokia receives proceeds from the Microsoft deal.”

The Microsoft deal would leave Nokia with its Nokia Solutions and Networks (NSN) unit as the main business generating around 90% of the company’s sales.

Some analysts believe the prospective deal can be a big boost in the lucrative U.S. market where NSN has traditionally been weak. It would help Alcatel-Lucent focus on its fast-growing IP routing and optical business. A combination with Alcatel-Lucent would increase NSN’s market share in the global wireless infrastructure market from 18% to more than 30%, leapfrogging Huawei and closing in on Ericsson, Reuters said quoting an analyst data. However, another source reveals that Nokia may not be the only company interested in buying some of Alcatel’s assets. Other network equipment makers such as Juniper Networks and Ericsson have also recently eyed Alcatel-Lucent or some of its assets, even though none of the companies have spoken about the deal.