Nokia Mobile Networks Assets Said to Draw Interest From Samsung

Telecom Giant Nokia’s Mobile Networks Business Attracts Interest

Amidst the competitive landscape of the telecom equipment industry, Nokia Oyj’s mobile networks assets have sparked interest from potential suitors, including Samsung Electronics Co., according to sources familiar with the matter. Nokia’s mobile networks division has been facing challenges in competing with larger rivals like Huawei Technologies Co. As a result, the company has initiated discussions with advisors to explore potential options for the business unit.

Exploration of Options and Unit Valuation

Nokia has contemplated various scenarios for its mobile networks business, ranging from a partial or complete sale to a spin-off or a merger with a rival. The deliberations are still in their early stages, and there is no guarantee that a transaction will materialize. Sources estimate that the unit could be valued at approximately $10 billion.

Samsung’s Interest and Potential Competitors

Samsung has expressed preliminary interest in acquiring some Nokia assets to enhance its radio access network capabilities. Sources indicate that other competitors may also be drawn to any potential divestments. Nokia’s shares have witnessed a 24% surge in Helsinki trading this year, resulting in a market capitalization of around $23.5 billion.

CEO’s Efforts to Revitalize Nokia

Since assuming leadership four years ago, CEO Pekka Lundmark has been working diligently to revitalize Nokia. While the initial 5G rollouts showed promise, demand from telecom operators has declined, prompting the company to seek new growth avenues that are less reliant on network buildouts by carriers.

Nokia’s Spokesperson on Mobile Networks

A Nokia spokesperson emphasized the company’s commitment to the success of its mobile networks business, deeming it “highly strategic.” They outlined progress made in optimizing costs, protecting product development, and securing new deals with existing and prospective customers. Nokia remains focused on positioning its mobile networks division to meet customer demands, invest in its portfolio, and generate shareholder value.

Diversification and Growth in Other Segments

Nokia’s mobile networks division is responsible for supplying base stations, radio technology, and servers to wireless operators worldwide. It accounted for approximately 44% of the company’s total revenue in the previous year. However, the business has faced challenges due to delays in network upgrades by telecom operators, particularly in Europe.

Nokia’s Focus on Communications Equipment

Once a leading mobile phone supplier, Nokia divested that business after losing market share to Apple Inc. and Samsung. Since then, the company has shifted its focus to manufacturing communications network equipment, including gear for mobile device signal transmission.

Western Concerns over Huawei’s Dominance

Western governments have expressed increasing concern about Huawei’s dominance in the communications equipment sector and the scarcity of formidable competitors. Washington has raised concerns that China could utilize the company’s networks for intelligence gathering, given its extensive global deployment.

Potential Merger to Enhance Competitiveness

A merger between Nokia’s mobile networks business and a rival could result in a more robust entity capable of competing effectively in emerging technologies. Telecom operators have voiced frustration with the limited vendor options available. Samsung, known for its smartphones and memory chips, also operates in the communications equipment market but lacks the scale to rival Huawei and Ericsson AB.

Impact of Ericsson Deal and Nokia’s Diversification

Nokia experienced a significant setback when US operator AT&T Inc. opted for Ericsson as its sole supplier for mobile Open RAN equipment in a $14 billion deal. Nokia has responded by diversifying its customer base and exploring new growth areas.

Lundmark’s Statement on Unique Global Position

CEO Lundmark highlighted Nokia’s unique global position, emphasizing the company’s ability to deliver all essential network infrastructure components, including software, transport networks, optical connections, and both fixed broadband and mobile access networks. He asserted that Nokia stands alone in this regard.

Expansion in Fixed Networks and Artificial Intelligence

Nokia is experiencing growth in its fixed networks division, which provides equipment for fiber optic and cable technologies. The company acquired Infinera for $2.3 billion in June, a move seen as a strategic investment in the burgeoning artificial intelligence industry.