Nothing is certain yet at this point, but Nokia has confirmed it is indeed negotiations with Alcatel-Lucent regarding a possible acquisition.
As reported by Bloomberg, both companies have released respective statements saying that they are already in the midst of advanced talks about a potential merger between the two telecoms companies.
About a decade ago, Nokia used to be considered the biggest mobile phone manufacturer in the world. But in recent years, the Finnish phone maker has since been eclipsed by the success of Apple and Samsung, today's leaders in the global smartphone market. Struggling in recent times, Nokia had to sell its smartphone business to Microsoft a year ago for an amount of $7 billion. Now, the company is focusing its attention on its still-running telecoms division, which constructs equipment for wireless networks, and in developing its Here navigation service.
As for Alcatel, consumers may recognize it as a smartphone brand, although one that is not quite as dominant as Apple or Samsung. While some may think that the acquisition is an indication that Nokia is trying to get back to being the dominant phone maker it once was, it may not necessarily be the case. Alcatel Mobile, after all, was a combined effort from Alcatel-Lucent and China-based TCL Communications, with the former no longer related to the Alcatel brand after selling all its shares. Back in 2006, Alcatel-Lucent was formed as a result of the merger between US-based Lucent and France-based Alcatel.
It is more likely that Nokia is interested in purchasing Alcatel-Lucent because doing so would help it boost its current telecoms capabilities. As far as network infrastructure is concerned, Nokia is trying to catch up with rivals Ericsson and Huawei. The acquisition of Alcatel-Lucent would surely add scale to Nokia's infrastructure division, and would put it in a good position to stand toe to toe with its competitors.
Still, there are some industry watchers who do not view the potential acquisition as an entirely risk free transaction. Over the last few years, Alcatel-Lucent has had its own share of struggles. If Nokia were to buy Alcatel-Lucent, it would surely be inheriting some of its struggles, too.
For now, Nokia is trying to secure backing from the French state with regards to the possible buyout. Any merger would require approval from President Francois Hollande's administration, which in the past had tried to block similar corporate mergers from happening in the country.
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