Nokia to buy Alcatel-Lucent to grow in telecom equipment

admin   •   April 15, 2015   •   3284

HELSINKI/PARIS |

The logo of Alcatel-Lucent is pictured at the company headquarters in Boulogne-Billancourt near Paris April 14, 2015.
REUTERS/GONZALO FUENTES

(Reuters) – Nokia will buy Alcatel-Lucent in an all-share deal that values its smaller French rival at 15.6 billion euros ($16.6 billion), building up its telecom equipment business to compete with market leader Ericsson.

Nokia’s takeover of Alcatel-Lucent will redefine a telecom equipment sector suffering weak growth prospects and pressure from low-cost Chinese players Huawei [HWT.UL] and ZTE.

The combined company will have about 114,000 employees and combined sales of around 26 billion euros. In mobile equipment it will rank a strong second, with global market share of 35 percent, behind Sweden’s Ericsson with 40 percent and ahead of Huawei’s 20 percent, according to Bernstein Research.

The Finnish company will give Alcatel-Lucent shareholders 0.55 shares in the combined company for each of their old shares, resulting in 33.5 percent of the entity being in Alcatel’s hands and Nokia having the remaining 66.5 percent if the tender offer is fully taken up.

Nokia initially approached Alcatel-Lucent about buying only the wireless business but was rebuffed leading to the broader deal, Alcatel boss Michel Combes told Reuters in an interview.

Nokia shares rose 3 percent at the opening, while Alcatel-Lucent fell 11 percent, reversing trends on Tuesday when the talks were first acknowledged by the companies.

Alcatel shareholders were disappointed because they hoped for a part-cash offer, while Nokia holders were relieved that the group had not overpaid by making the offer all in shares, a trader said.

FRENCH JOBS PLEDGE

Nokia pledged to keep France as “a vibrant center of the combined company” and not to cut jobs beyond what Alcatel had already planned, especially protecting research and development sites at Villarceaux and Lannion.

Alcatel-Lucent has some 6,000 employees in France. Maintaining jobs was a key demand of the French state for its backing of the deal.

Nokia sold its once-dominant handset business last year after struggling to compete with smartphones by Apple and Samsung. That deal left it with the network unit, a smaller map unit and a bunch of technology patents.

The deal will be finalised in the first half of 2016 and is expected to result in 900 million euros of operating cost savings by the end of 2019, the companies said on Wednesday.

Some analysts said the deal carried significant risks. The track record of mergers in the sector has been poor over the past decade because of the difficulty of cutting costs in an R&D intensive business.

“Nokia’s risk profile will increase considerably… The risk is that the merger will become a long and rocky road and investors lose their patience following through the integration program that will take years,” said analyst Mikael Rautanen from Inderes Equity Research.

Other analysts, however, noted that Nokia and its Chief Executive Rajeev Suri have a good record on restructuring.

“There is no reason to doubt that this deal too wouldn’t increase shareholder value… We know that there are risks related to France and the cost cuts, but I believe that Nokia has calculated a margin of safety to the deal price,” said strategist Jukka Oksaharju from Nordnet brokerage.

Separately, Nokia confirmed it was exploring the sale of its HERE mapping unit, which analysts value at up to 6.9 billion euros.

The new Nokia will have stronger exposure to the important North American market, with key contracts with AT&T and Verizon and a fast-growing Internet routing business.

“The combined company is expected to have a stronger growth profile than Nokia’s current addressable market,” Nokia said, predicting a sales growth rate of about 3.5 percent for 2014 to 2019.

JPMorgan advised Nokia on the takeover, and boutique investment bank Zaoui & Co. advised Alcatel-Lucent.

(Editing by James Regan and Keith Weir)

UK to purge Huawei from 5G by 2027

UNTV News   •   July 15, 2020

Prime Minister Boris Johnson ordered Huawei equipment to be purged completely from Britain’s 5G network by 2027, risking the ire of China by signaling that the world’s biggest telecoms equipment maker is no longer welcome in the West.

The seven-year lag will please British telecoms operators such as BT, Vodafone and Three, which had feared they would be forced to spend billions of pounds to rip out Huawei equipment much faster. But it will delay the roll out of 5G.

The decision was announced in parliament on Tuesday (July 14) by Johnson’s Digital, Culture, Media and Sport Secretary, Oliver Dowden.

Dowden also confirmed Britain’s National Security Council (NSC), chaired by Johnson, has decided to ban the purchase 5G components from the end of this year.

The United States had long pushed Johnson to reverse a decision he made in January to grant Huawei a limited role in 5G.

London has also been dismayed by a crackdown in Hong Kong and the perception China did not tell the whole truth over the coronavirus.

The cyber arm of Britain’s GCHQ eavesdropping agency, the National Cyber Security Centre, told ministers it could no longer guarantee the stable supply of Huawei gear after the United States imposed new sanctions on chip technology.

Telecoms companies will also be told to stop using Huawei in fixed-line fibre broadband within the next two years.

Dowden said the UK would be on an “irreversible path” for the complete removal of Huawei equipment from its 5G networks by the time of the next general election, currently scheduled for 2024.

Chi Onwurah of the opposition Labour party told lawmakers the government had been “incomprehensibly negligent” with its approach to 5G, Huawei and national security until making the decision, describing the situation as an economic “car crash” that “could have been visible from outer space.”

With faster data and increased capacity, 5G will become the nervous system of the future economy – carrying data on everything from global financial flows to critical infrastructure such as energy, defence and transport.

After Australia first recognised the destructive power of 5G if hijacked by a hostile state, the West has become steadily more worried about Huawei.

(Production: Ben Dangerfield)

Nokia workers protest against planned job cuts in Paris

UNTV News   •   July 9, 2020

Several hundred Nokia workers protested in Paris on Wednesday (July 8) against plans to cut over 1,200 jobs in its French subsidiary Alcatel-Lucent International.

Nokia has said most of the layoffs would come from research and development (R&D) teams. Unions say this is incomprehensible when Europe is preparing to deploy the next generation mobile network.

Member of the French parliament from the ruling party LaRem, Eric Bothorel, who was elected in the northwestern region of Côtes-d’Armor, where there are planned job cuts, said Nokia’s announcement came just after the date set releasing the company from commitments to preserve jobs.

Nokia was bound to job retention commitments when it acquired Alcatel Lucent in 2015. They expired in June.

Bothorel said the move was “making fun of the government” as it targeted people who were recently hired.

Nokia says it will continue to be a major employer in France with a strong foothold in R&D. (Reuters)

(Production: Emilie Delwarde, Thierry Chiarello, Yiming Woo, Ardee Napolitano)

Paris airport’s ‘new normal’ comes with UV tunnel and thermal cameras

UNTV News   •   June 26, 2020

Orly Airport has ramped up security measures as it prepares to resume commercial flights after a nearly three-month hiatus.

With lockdown restrictions easing and Europe starting to open up its borders, scheduled flights will start on Friday (June 26), with a 6:00 a.m. Paris-Porto flight kicking off departures.

Passengers can no longer enter the terminals with non-flying companions, and wearing masks is required, Orly Airport’s passengers control officer Nathalie Chailly said.

Alcohol gel dispensers are available across the terminals, and floor markings urge social distancing. Thermal cameras are in place at the arrival area, where passengers with a temperature of 38 degrees or above can benefit from a medical consultation, but will not be forced to go under quarantine.

Tech firm LabScience has a developed a prototype of an ultraviolet-rays decontaminating tunnel, being tested at Orly Airport. The tunnel uses a high concentration of ultraviolet light over 4 to 5 seconds to kill micro-organisms on a piece of luggage or a coat, before the objects are scanned by x-ray.

Orly, the second biggest airport serving the capital, was shut to passengers on March 31.

Around 74 departures and arrivals in total are scheduled for Friday, compared to a usual load of 600 flights a day, according to Orly Airport.

Only domestic flights and flights to and from Schengen countries and France’s overseas departments will be flying out of Orly, through companies including Air France, Air Caraibe, Transavia and Wizz Air. The airport is expecting around 8,500 passengers on Friday, sharply down from the daily average of 90,000 passengers before the pandemic.

Duty-free shops will also re-open on Friday. (Reuters)

(Production: Antony Paone, Michaela Cabrera)

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