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.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuestelecommunicationalcatel-lucentNokiaMergers and acquisitions

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Mikael Ricknäs

IDG News Service
Show Comments

Cool Tech

Crucial Ballistix Elite 32GB Kit (4 x 8GB) DDR4-3000 UDIMM

Learn more >

Gadgets & Things

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Family Friendly

Lexar® JumpDrive® S57 USB 3.0 flash drive 

Learn more >

Stocking Stuffer

Plox Star Wars Death Star Levitating Bluetooth Speaker

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?