Menu
Nokia wants to buy Alcatel-Lucent, seeking growth and integration of fixed and mobile

Nokia wants to buy Alcatel-Lucent, seeking growth and integration of fixed and mobile

The two companies are in advanced discussions about a deal, they confirmed on Tuesday

Nokia and Alcatel-Lucent are in advanced merger talks, the companies confirmed Tuesday following media speculation that a deal was in the works.

The talks could still fall apart, but a deal is on the table that would see Nokia acquire Alcatel-Lucent in a stock swap, the companies said.

A merger would give the combined entity a broader product portfolio and greater scale, but would bring its own challenges.

It makes sense for Nokia, a mobile broadband specialist, to merge with Alcatel-Lucent, which has a strong position in fixed networks, according to Mark Newman, chief research officer of Ovum's telecoms research business.

As mobile and fixed networks become increasingly integrated, not having the latter is becoming a disadvantage for Nokia, Newman said. The growing worldwide popularity of smartphones has increased the focus on mobile networks, but fixed broadband networks are still needed to deliver high-resolution video content and to provide backhaul for Wi-Fi networks in homes. The integration of Alcatel-Lucent's fixed offering with the best parts of the two companies' respective mobile offerings could in that regard be a boon for end-users, he said.

The companies' size makes it no surprise that they are plotting a merger.

The two vendors are a distant third and fourth to Ericsson and Huawei Technologies in the access networks market, Newman said. A merger would give them scale and a larger footprint that would help them compete with Ericsson and Huawei.

In any case, said Gartner research director Sylvain Fabre, the market for telecommunications access equipment probably isn't big enough to sustain more than three major vendors in the long run.

For Alcatel-Lucent, the acquisition talks come at a time when its so-called Shift reorganization plan is starting to bear fruit, so it can negotiate from a better position, Fabre said.

Merging a Finnish-German company with a French-American one comes with big cultural challenges at time when speedy innovation is necessary. The key to a successful merger will be getting everyone to work together as quickly as possible. The companies' past merger history leaves them with large groups of employees in the U.S. (Lucent), France (Alcatel), Finland (Nokia) and Germany (where Nokia previously acquired the networking activities of Siemens). The governments of those countries will also have to be appeased for a deal to be approved.

With the development of 5G ramping up and the industry going through a major change where software is becoming more important than hardware, no vendor can afford to slow down.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuestelecommunicationalcatel-lucentNokiaMergers and acquisitions

Featured

Slideshows

Examining the changing job scene in the Kiwi channel

Examining the changing job scene in the Kiwi channel

Typically, the New Year brings new opportunities for personnel within the Kiwi channel. 2017 started no differently, with a host of appointments, departures and reshuffles across vendor, distributor and reseller businesses. As a result, the job scene across New Zealand has changed - here’s a run down of who is working where in the year ahead…

Examining the changing job scene in the Kiwi channel
​What are the top 10 tech trends for New Zealand in 2017?

​What are the top 10 tech trends for New Zealand in 2017?

Digital Transformation (DX) has been a critical topic for business over the last few years and IDC is now predicting a step change as DX reaches macroeconomic levels. By 2020 a DX economy will emerge and it will become the core of what New Zealand industries focus on. From the board level through to the C-Suite, Kiwi organisations must be prepared to think and act digital when the DX economy emerges in 2017.

​What are the top 10 tech trends for New Zealand in 2017?
Top 15 Kiwi tech storylines to follow in 2017

Top 15 Kiwi tech storylines to follow in 2017

​The New Year brings the usual new round of humdrum technology predictions, glaringly general, unashamedly safe and perpetually predictable. But while the industry no longer sees value in “cloud is now the norm” type projections, value can be found in following developments of the year previous, analysing behaviours and patterns to formulate a plan for the 12 months ahead. Consequently, here’s the top Kiwi tech storylines to follow in 2017...

Top 15 Kiwi tech storylines to follow in 2017
Show Comments