Nokia’s business related to mobile communication networks may find a new owner in the foreseeable future – Samsung and several other potential buyers are interested in these assets, Bloomberg reports. It is noted that it is becoming increasingly difficult for the Finnish manufacturer of telecommunications equipment to find new growth factors in the mobile network segment.
Image source: nokia.com
Nokia is consulting on possible options for further development of its business related to cellular networks – the company has been fighting with a larger competitor in the person of Huawei for several years. The Finnish manufacturer has explored a number of scenarios, including selling part or all of the division, spinning it off into its own entity, or merging with a competitor. The discussion has just begun, and there is no certainty that Nokia will decide on any deal. The division is valued at $10 billion, sources told Bloomberg.
Samsung has expressed interest in acquiring some of Nokia’s assets, but other players may also be involved. Information about a possible sale triggered a rise in Nokia shares by 5.1% to €3.98 – the fastest since April; this year, the company’s shares have risen in price by 30%, and its market value now stands at about €22.3 billion. Four years ago, Nokia was headed by Pekka Lundmark, and all this time he has been trying to turn the tide. Operators around the world began to actively roll out 5G networks, but over time, demand began to decline, forcing the company to start looking for new business areas that are not so dependent on operators.
Nokia’s mobile networks division supplies base stations, servers to operators, and licenses radio technologies around the world. It contributed 44% of the company’s total revenue last year and is the company’s largest segment. These are difficult times for this business: mobile operators, especially European ones, are postponing expensive network upgrades. Nokia was once the world’s largest mobile phone manufacturer, but was forced to sell this business, and its market share was divided by Apple and Samsung. Since then, the company has focused on the production of communications equipment.
Western authorities are increasingly concerned about Huawei’s dominance in the telecommunications equipment sector and the lack of strong competitors for the Chinese giant. Washington warns that Beijing is capable of using networks built by the Chinese company around the world to collect intelligence. Combining Nokia’s mobile network equipment business with one of its competitors will help form a strong unit that can survive in today’s market. Samsung is one such competitor, and it currently lacks the scale to compete with Huawei and Ericsson. Last year, the intention of the American operator AT&T to exclusively purchase Open RAN equipment from Ericsson for $14 billion was a big blow for Nokia.
«We are the only company in the world outside of China that can supply all the major components of network infrastructure: network software, transport networks, all optical connections, and then both fixed broadband and mobile access networks. There is no one else,” Mr. Lundmark said in a July interview with CNBC. Nokia’s fixed line networks division is now seen as the main growth driver. In June, the company announced the takeover of American Infinera for $2.3 billion – its most interesting asset turned out to be communication technologies between servers in data centers. The deal was the largest since the takeover of Alcatel-Lucent for €10.6 billion in 2016.