Nokia’s recently announced takeover of Alcatel-Lucent could have major repercussions in India, a significant market for both players, should the deal go ahead. (See Nokia & Alcatel-Lucent: What’s Going On?)
Finnish telecom network equipment maker Nokia Corp. (NYSE: NOK) announced earlier this week it would acquire Alcatel-Lucent (NYSE: ALU) in an all-stock deal valued at €15.6 billion ($16.6 billion). The merged entity will become the world’s second-largest supplier of networking hardware, software and services to communications providers globally — behind Sweden’s Ericsson AB (Nasdaq: ERIC) and just ahead of China’s Huawei Technologies Co. Ltd. . (See Nokia to Claim #2 Carrier Vendor Ranking and Nokia Makes €15.6B Bid for Alcatel-Lucent.)
“Alcatel-Lucent’s strength in fixed-line networks is very much complementary, when it comes to deals where telcos are building capacities in wireline broadband as well as business-facing enterprise networks like leased lines, Ethernet or MPLS,” says Deepak Kumar, the founder of analyst firm BusinessandMarket.net.
In the telecom equipment space, Nokia will gain a new customer in the shape of Reliance Jio — the only player with a 2.3GHz license covering the entire country. Alcatel-Lucent already counts Reliance Jio as a customer and its Bell Labs R&D division is also helping the operator to conduct 4G trials.
As for Nokia, it has managed to secure 4G contracts with Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India’s biggest player, and will be in a better position to provide additional 4G products and services following a merger with Alcatel-Lucent.
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Moreover, Alcatel-Lucent’s fixed-line capabilities should help Nokia to build a presence in the enterprise segment, a growth opportunity for all the telecom equipment companies. Although Alcatel-Lucent sold an 85% stake in Alcatel-Lucent Enterprise to China Huaxin in October, it still holds a 15% in the business that could support Nokia’s enterprise ambitions.
“Alcatel Lucent’s continued stake, albeit small, in the enterprise business that it hived off earlier would help Nokia extend its play in the enterprise segment,” says Kumar. “Ericsson and Huawei are also trying to make their presence felt in the enterprise space.”
Besides being a dominant player in India’s fixed-line market, Alcatel-Lucent is also the CDMA market leader, although it has been losing market share in the broader mobile market.
Nokia employs 11,000 staff in India, making it the company’s biggest geographical operation outside Finland.
It also has an R&D center in Bangalore, global delivery centers in Noida and Chennai and a manufacturing unit at Chennai.