Well, if you’re in the tech industry then you must have heard of Nokia and their latest acquisition.
If you haven’t well, Nokia has acquired Alcatel-Lucent for 16.5 Billion Euros. Industry experts have tried to decipher the reason for this and here are some of the reasons they think this acquisition was effected:
- Nokia’s acquisition of Alcatel-Lucent gives the company a much stronger share of the communications service provider infrastructure, software and services market. However, for success, Nokia must do a complete acquisition and be able to perform a portfolio rationalisation very fast, or it can suffer the worst pains of its former mergers.
- Nokia Networks gets access to key Tier1 customers in US, which it was lacking, as well as to customers in China through the subsidiary Alcatel-Lucent Shanghai Bell. Asia and Africa are markets that are still in very early stages of 4G planning and these markets present opportunities for Nokia Networks to take market share away from its closest competitors, Ericsson and Huawei Technologies.
- Nokia Networks acquires a key product-focused portfolio from Alcatel-Lucent, including IP transport network, optical technology, specific network analytics and wireless technology assets which should enable the combined company to compete more effectively with Ericsson and Huawei as more operators, particularly, large Tier1 operators, move towards Fixed Mobile Convergence
- Fixed broadband is a resurgent area now and in the future, with related connected home and FMC opportunities. Hence, having a strong position in this area will be key for Nokia Networks to position itself at the top, ahead of its closest competitors.
- Nokia Networks has also just completed a round of divestments and restructuring, to focus itself on its core strength in Mobile Broadband. The acquisition comes at a good time to combine portfolios, after additional mobile product line rationalization.
- The acquisition of Alcatel-Lucent also gives Nokia an OSS portfolio and Nuage Networks that provides it with WAN-SDN solutions and access to a broader range of customers. But this acquisition does not provide it with products to address the BSS space.
- The combined company will have a well-rounded portfolio that can cater to the requirements of CSPs engaged in optimising and monetising their networks and in moving towards virtualisation and the digital economy in the long-term. However the manner in which the Alcatel-Lucent assets are integrated will be key to success in this area.
- The deal is expected to be finalised in the first half of 2016, but it will take much longer for the portfolio rationalisation to have an effect on the market. In the meantime, this will create a slowdown in infrastructure deals and could result in an advantage for the competitors.