Alcatel-Lucent acquisition could suit Nokia: analyst

Nokia takeover of struggling French telecoms vendor could be on the cards, says IDC analyst

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Alcatel-Lucent acquisition could suit Nokia: analyst Popal: Nokia would wait to see whether Alcatel-Lucent's financial performance improves
By  Tom Paye Published  May 4, 2014

Now that it has completed the sale of its mobile devices division to Microsoft, Nokia might do well to consider acquiring Alcatel-Lucent to fill in the gaps in its product offering, according to Nabila Popal, research manager at IDC MEA.

As Nokia has shifted its focus to high-grade networking equipment - and even appointed the former head of Nokia Solutions and Networks (NSN), Rajeev Suri, as its new CEO - Popal said that Nokia now needs to take the fight to flourishing telecoms vendors such as Huawei and Ericsson.

This could be achieved, she suggested, by using the leftover cash from acquisitions and buybacks to acquire other companies. Alcatel-Lucent could be a prime candidate for a Nokia acquisition, she said.

"Although Suri has hinted towards ‘small' acquisitions to fill in the gaps in [Nokia's] product offering, one opportunity for Suri could be to decide what Nokia previously considered last year - taking over Alcatel-Lucent, the French-American company that announced in October a play to cut 10,000 jobs worldwide," Popal said.

Nokia was rumoured last year to have an interest in acquiring Alcatel-Lucent's IP-routing and wireless divisions. However, people close to the situation said that Nokia had decided not to embark on formal talks with the French vendor, it was reported.

This time around, however, Nokia could be more interested, Popal said, particularly if Alcatel-Lucent's job cuts help to revive the struggling aspects of the business.

"Although the job cuts may postpone the takeover in the near future, Nokia would wait to see whether Alcatel-Lucent's financial performance improves as a result," Popal explained.

"It is definitely something on the horizon that may prove beneficial to be considered in the near future."

1722 days ago

Research firm Kepler Cheuvreux commented that Nokia will have about 2 billion of net cash following the deal and will likely aim to keep about 1 to 2 billion to protect against any downturn. This means that Nokia won't go after Alcatel-Lucent (NYSE: ALU) amid recent market chatter. Alcatel has a market cap around $11.1 billion.

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