Nokia and Alcatel-Lucent Move Closer to Merger

TPhoto illustration of a woman holding a smartphone in front of a screen displaying both Nokia and Alcatel Lucent logos in Parishe merger between telecommunication manufacturers Nokia and Alcatel-Lucent continues to gain momentum with the securement of regulatory approval in key jurisdictions including the U.S. and Europe. This comes upon the recent postings of strong second-quarter results by both companies.

“While we expect the telecom infrastructure market to remain challenging, I believe that our disciplined operating model and strong execution capabilities will continue to differentiate us in this environment,” said Rajeev Suri, CEO of Nokia. “Additionally, we remain highly focused on reducing costs and improving efficiency in order to mitigate the impact of market conditions.”

In April Nokia announced that it was pursuing a merger with Alcatel-Lucent for $16.5 billion. Based on these positive earnings and overcoming regulatory hurdles, the companies believe that the acquisition may be completed by the end of the year or in the early part of 2016.

Nokia hopes that the merger with Alcatel-Lucent will diversify its network infrastructure portfolio by including both wireless and wired tech. The companies intend to lead in next-generation network technology and services, enabling the next wave of technological changes such as Internet of Things (IoT) and cloud services.

Some industry experts believe that the merger is already putting pressure on rival Ericsson, Swedish telecommunications equipment manufacturer, which currently dominates the telecom market. The recent profit margins announced by both companies has already surpassed Ericsson.

“The rivals’ progress shows Ericsson CEO Hans Vestberg has his work cut out to help the Swedish company catch up,” Adam Ewing of Bloomberg wrote. “Vendors need to be consistently profitable to ensure they have the means for product development and marketing as they compete for contracts reaching billions of dollars from the likes of AT&T Inc. and Vodafone Group Plc.”

The Nokia/Alcatel-Lucent will also stand as a major competitor with Huawei, China’s emerging powerhouse networking company.

“Our disciplined operating model puts us in a strong position to deliver in a competitive market,” Suri told Bloomberg Business. “[A]nd we plan to maintain that model after we close our transaction with Alcatel-Lucent.”

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