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Nokia makes move to buy Alcatel-Lucent

Duo announce ‘advanced discussions’; analysts wary of political opposition to French job losses

Nokia makes move to buy Alcatel-Lucent
If the deal goes ahead, Nokia could be in a position to battle rivals such as Ericsson and Huawei, but the history of mergers in the telecoms vendor sector does not bode well for the Finnish company.

Finland's Nokia has made an approach to acquire French telecoms vendor Alcatel-Lucent, a year after selling its loss-making handset business to Microsoft, Reuters reported.

If the deal goes ahead it would combine two relative minnows in the industry to do battle with Sweden's Ericsson and China's Huawei, but could also face political obstacles.

The companies referred to "advanced discussions" in a joint statement today, as they said any possible deal would pave the way for a "full combination, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent".

The telecoms equipment industry has seen a number of failed mergers, including Nokia with Siemens and Alcatel-Lucent itself. Aligning product portfolios is difficult because companies are supporting product lines with long lifespans that serve international telecom networks.

In addition, the French government may be opposed to any deal that threatens jobs in a sector seen as critical to the country's economy. Alcatel-Lucent employs 6,000 staff in France out of a global total of 52,000. Nokia has almost 62,000 employees.

"The future of Alcatel-Lucent would be assured, but our biggest fear is the future of our R&D in France, since it develops products in direct competition with Nokia," said Christophe Civit, a union rep at Alcatel-Lucent.

Other suitors for Alcatel-Lucent are seen as unlikely by analysts. Ericsson would fall foul of competition watchdogs if it grew any larger and Huawei would be politically opposed in both France and the US, where Alcatel-Lucent does volume business with AT&T and Verizon.

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