Analyst: Combined company better suited to compete against Ericsson, Huawei
Nokia officials confirmed on April 14 that the Finnish company is in “advanced discussions” with Alcatel-Lucent on a potential purchase of the rival networking firm.
Nokia released the statement following numerous media reports that suggested Nokia is considering unloading mapping unit Here.
The Nokia statement reads: “In relation to recent media speculation Nokia and Alcatel-Lucent confirm that they are in advanced discussions with respect to a potential full combination, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent. There can be no certainty at this stage that these discussions will result in any agreement or transaction.”
Analysts were quick to point out that the news, initially reported by Bloomberg on Friday, drove up shares of both Nokia and Alcatel-Lucent.
Analytics firm Inderes Equity Research estimated the value of Here at between $3.5 billion and $5 billion.
Mark Newman, chief research officer for research and advisory firm Ovum, called the potential deal a “logical” move.
“Nokia is a mobile-only equipment vendor, while Alcatel-Lucent’s strengths are in the fixed-network business. It has long-struggled in the wireless business, and its attempts to become a leading player in LTE have failed.”
Newman also pointed out that a merger would likely prompt a “period of introspection and restructuring. It would create significant duplication in areas such as mobile broadband and small cells.”
He said the move could help a combined company compete against the likes of Ericsson and Huawei.
