Earlier this week it was announced that Finnish telecoms equipment company Nokia plans to purchase French firm, Alcatel-Lucent, for $16.5 billion.

Until recently the telecoms networks space has been dominated by communications technology and services provider, Ericsson, and Chinese ICT technologies providers, Huawei Technologies and ZTE.

The partnership announcement (Nokia and Alcatel-Lucent), however; has been welcomed as one that will bring competition and scale in the market.

In a joint statement on Wednesday Alcatel-Lucent and Nokia announced that they intend to combine to create an innovation leader in next generation technology and services for an IP connected world.

It was further noted that the combined company will be in a position to accelerate development of future technologies including 5G, IP and software-defined networking, cloud, and analytics.

Rajeev Suri, president and chief executive officer of Nokia said in the statement,

"Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services, with the scope to create seamless connectivity for people and things wherever they are."

According to Bernstein Research a third player of similar size will rank a Nokia and Alcatel-Lucent union second in mobile equipment, with a global market share of 35% behind Ericsson at 40% and ahead of Huawei's 20%,

South African analyst and Strategy Worx chief executive officer Steven Ambrose told ITWeb Africa that the possible merger makes a lot of sense in a tough and competitive market.

Pieter Nel, ICT research analyst at Frost & Sullivan shared similar sentiments noting that the combined entity will be valued at approximately $40 billion at current prices, roughly the equivalent of rival Ericsson.

Nel explained "There have been talks that operating cost synergies of 900 million euros will be realised in 2019. However, looking at the past, it is evident that these synergies do not always materialise, or at least to the extent that Nokia, the potential new combined entity, has calculated."

ITWeb Africa contacted Ericsson to get comments on what the Nokia and Alcatel-Lucent partnership would mean for their business.

In an emailed statement Ericsson said, "We have seen that Nokia and Alcatel-Lucent have entered into a memorandum of understanding under which Nokia will make an offer for Alcatel-Lucent, but we don't comment on our competitors activities.

"We continuously evaluate the competitive environment, but our focus is on our strategy and our work to deliver leading solutions and services to the leading operators in the world," reads the statement by Ericsson.

Swedish company Ericsson is regarded as the market leader in the telecoms equipment business.

What implications does this deal have for Africa?

Alcatel-Lucent's presence on the continent has been on a steady rise, with the company providing services and forming partnerships with African countries such as Tunisia, South Africa and Nigeria.

Headquartered in Cairo, Egypt, Alcatel-Lucent's META organisation has offices in almost all of the region's 68 countries

Meanwhile, China's Huawei and ZTE are present in over 50 African countries as of 2010 supplying telecom and ICT equipment, according to reports.

Nel explained that over the last 5 to 6 years, ZTE and Huawei have undertaken an aggressive expansion strategy in the African telecoms market.

They have increased their footprint across the continent, establishing a presence in some of the leading markets, such as South Africa, Kenya, Zambia, and Nigeria, he said.

"It has become increasingly difficult for Nokia, Ericsson and Alcatel to compete, with ZTE and Huawei often undercutting their rivals.

"By combining their operations, Nokia and Alcatel will have the scale to become a much stronger competitor in the market. With connectivity in most African countries still far behind that of the rest of the world, the continent may well be a key battleground for them in driving their growth," Nel told ITWeb Africa.

The combined company will bring Nokia very close in size to Ericsson.

According to Ambrose a merger between Nokia and Alcatel-Lucent will allow the merged companies to compete more effectively in Africa where Huawei has made significant gains in recent years.

Ambrose noted, "There will be no real impact in South Africa for now as their combined footprint is fairly limited. However, the top three telecoms companies being Ericsson, Huawei and now Nokia with Alcatel will make for greater competition and potentially greater innovation."