BUSINESS TECHNOLOGY MEDIA FOR AFRICA

Nokia, Alcatel-Lucent merger talks

Nokia, Alcatel-Lucent merger talks
Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
14 Apr 2015

Finland based telecoms equipment company Nokia and French firm, Alcatel-Lucent, are reported to be in merger talks.

Alcatel-Lucent's head of communications for Middle East, Turkey & Africa (META), Sherine Aziez told ITWeb Africa that the two companies are in "advanced discussions", which could take the form of a public exchange offer by Nokia for Alcatel-Lucent.

"There can be no certainty at this stage that these discussions will result in any agreement or transaction," she said in a statement.

Further details such as the potential value of the deal have been withheld.

Alcatel-Lucent and Nokia are both listed firms with a market value of about $12 billion and a market capitalisation of $30 billion respectively.

As expected, the share price of Nokia fell after the announcement of the potential merger, Pieter Nel, ICT research analyst at Frost & Sullivan commented.

"The companies confirmed that the merger would take place in a form of a public stock exchange. This translates into both companies sharing the risk or reward of the merger, as compared to a cash offering where Nokia would bear all the potential risk or reward," Nel told ITWeb Africa.

From an investor perspective, a stock offering could signal that the acquirers stock may be overvalued, he said.

What could this mean for Africa operations?

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.

According to Nel - Chinese telecoms equipment providers, Huawei and ZTE, have grown their presence in Africa quite aggressively.

They (Huawei and ZTE) have won a number of key contracts with operators across the continent, often undercutting Ericsson, Nokia and Alcatel-Lucent, Nel explained.

"The combined entity of Nokia and Alcatel-Lucent operations would make a much stronger player in Africa," he stated.

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