Paris: Finnish telecoms equipment maker Nokia said yesterday it was in talks to purchase all of its Franco-American rival Alcatel-Lucent, sparking a quick reaction from the French state.
Keen to protect French jobs in the event of a merger, French President Francois Hollande met with the chief executives of Nokia, Rajeev Suri, and Alcatel-Lucent, Michel Combes, at the Elysee palace in the afternoon, the Elysee announced.
“I will be extremely vigilant about preserving jobs and all French factories,” Economy Minister Emmanuel Macron said.
He said he was keeping in close touch with Alcatel executives about the possible deal, and would also strive to ensure the company’s research and development sites wouldn’t be hurt.
Earlier the companies announced in a statement “...that they are in advanced discussions with respect to a potential full merger, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent.” However, they added that “there can be no certainty at this stage that these discussions will result in any agreement or transaction.”
The Finnish company was the world’s biggest mobile phone maker for more than a decade until it was overtaken by South Korea’s Samsung in 2012.
Then in 2014, Nokia sold its mobile phone and tablet division to US software giant Microsoft, and the company now develops mobile and Internet network infrastructures for operators. Its focus is now on mobile technologies such as LTE and 4G, and its mapping and location system subsidiary called HERE. The announcement came a day after reports that Nokia was in talks to acquire Alcatel-Lucent’s wireless infrastructure business.
Rumours have swirled since December of a possible deal between the two firms, with France’s Les Echos reporting on Monday that executives had been in negotiations since January.
The French government said yesterday it was concerned about jobs disappearing in France if the merger were to go through.
A merger would, however, represent a significant boost in market share for Nokia. The Alcatel-Lucent wireless infrastructure unit alone accounted for 36 percent of total sales for the Paris-based company in 2014, according to Bloomberg, generating $5bn in revenue. The deal would help Nokia bolster its mobile infrastructure business against Swedish arch-rival Ericsson and China’s Huawei, profiting from Alcatel’s position as a leading supplier of 4G and LTE mobile networks and related services.
Imran Choudhary, telecoms analyst at Kantar Worldpanel, said the potential involvement of the French government and regulators could scare Nokia’s investors off. “It does not come as a surprise that this could be very tricky for Nokia to pull off and to deliver gains on, which would explain why investors have not reacted positively,” he said.
Craig Erlam, markets analyst at trading firm Oanda, agreed, noting that some 6,000 jobs could be at risk in France. Nokia employs some 55,000 people worldwide, while Alcatel-Lucent employs almost 53,000.AFP
