Nokia prepares for AI boom with Infinera acquisition

Nokia said the purchase of Infinera, along with the sale of the Alcatel Submarine Networks business, will ‘reshape’ its Network Infrastructure unit

Nokia said it is buying optical networking vendor Infinera for $6.65 per share, equating to a value of $2.3 billion, in a deal that is expected to increase the Finnish company’s presence in North America, as 60% percent of Infinera’s sales come from this region.

“In 2021 we increased our organic investment in Optical Networks with a view to improving our competitiveness. That decision has paid off and has delivered improved customer recognition, strong sales growth and increased profitability,” Nokia President and CEO Pekka Lundmark said. “We believe now is the right time to take a compelling inorganic step to further expand Nokia’s scale in Optical Networks.”

In addition to deepening Nokia’s hold on the U.S. market, the acquisition will also expand its networking products for data centers, which Lundmark stated it key to remaining competitive as the AI boom will lead to an unprecedented demand for server capacity: “AI is driving significant investments in data centers at the moment, and one of the key attractions of this acquisition is that it significantly increases our exposure to data centers,” he said.

The transaction will increase the scale of Nokia’s Optical Networks business by 75%, claimed the company. “The combination of these two businesses is also expected to accelerate Nokia’s strategic goal of diversifying its customer base and growing in enterprise. Internet content providers (ICP or webscale as Nokia typically calls this segment) make up over 30% of Infinera’s sales. With recent wins in line systems and pluggables, Infinera is well established in this fast-growing market,” it continued.

Nokia also announced its intent to sell its Alcatel Submarine Networks business to the French state. In a press statement, the company said that this sale, along with the Infinera purchase, will “create a reshaped Network Infrastructure built on three strong pillars of Fixed Networks, IP Networks and Optical Networks,” and that it is targeting “mid-single digit organic growth” for its overall Network Infrastructure business.