Nokia delays closure of sale to Microsoft of smartphone business

Nokia said it has yet to receive antitrust clearances from some countries in Asia

Nokia has delayed to April the sale of its smartphone business to Microsoft as it still hasn't received approvals from certain antitrust authorities in Asia.

Microsoft said in September it plans to acquire Nokia's Devices & Services business, which includes the smartphone and mobile phones businesses, for over US$7 billion. The deal, which also includes licensing of patents by Nokia to Microsoft, was expected to close in the first quarter of this year.

Nokia said Monday the deal had already received most of the required regulatory approvals, including approvals from the European Commission and the U.S. Department of Justice. The two companies continue to make good progress related to the closing conditions and integration planning, Nokia said.

"We are nearing the final stages of our global regulatory approval process -- to date we have received approvals from regulatory authorities in 15 markets on five continents," wrote Microsoft's general counsel Brad Smith in a blog post announcing the delay in closure of the transaction.

A Nokia spokeswoman in India declined to name the countries where Nokia and Microsoft still need antitrust clearance. China has not yet approved the deal, according to sources.

The Competition Commission of India approved the deal in October, as it found that the combination of the two companies will not likely have an "appreciable adverse effect" on competition in the country.(

Nokia's handset factory in Chennai in south India has, however, been frozen by Indian federal authorities in a dispute over taxes for mobile phone software licenses.

The company faces another dispute over unpaid sales tax on phones made at the factory from authorities in the state of Tamil Nadu where the factory is located. Nokia has contested the claim in the local High Court, stating that no sales tax can be levied on exported products. The state government claimed that devices made at the factory were not exported but were instead sold domestically.

Nokia said the delay in closure of the transaction is not linked to the tax issues in India and will not affect the deal terms materially. The Chennai factory won't be included in the transfer to Microsoft for a temporary period if the issue is not resolved before the deal is closed, and will operate as a contract manufacturer to Microsoft, according to sources.

Microsoft said last year it would submit the proposed acquisition for approval in the E.U., U.S., China, India, Brazil, Russia, Canada and other countries.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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