Nokia Oyj is in talks to buy Alcatel-Lucent, a deal that could create a European telecoms equipment group worth over 40 billion euros. David Pollard reports.
Nokia in advanced talks to buy Alcatel-Lucent, in a bid to create a European telecoms equipment giant. On paper it's a good fit - according to Reuters Deputy Paris Bureau Chief Andy Callus. SOUNDBITE (English) REUTERS DEPUTY PARIS BUREAU CHIEF, ANDY CALLUS, SAYING: ''Alcatel has US presence, that Nokia doesn't have. Alcatel also has a very strong position in IP routers and what's called backhaul. These are basically the areas of the telecoms equipment business that allow core networks to communicate with more sub-networks.'' The combined company would be worth over 40 billion euros. Bulking up will help cut costs. But combining the region's third and fourth wireless equipment makers won't be easy. SOUNDBITE (English) REUTERS DEPUTY PARIS BUREAU CHIEF, ANDY CALLUS, SAYING: ''It does however combine two of the industry's weaker players. Obviously, that's good in terms of cutting costs, but costs are actually very difficult to cut in this industry. Its mergers have a bad record. Alcatel has got first-hand experience of that with its deal with Lucent didn't go terribly well. Nokia has similar first-hand experience when it bought Siemens networks.'' Analysts are also concerned about opposition from the French government. It views the communications industry as "strategic" - and is sensitive about job cuts. A counterbid, though, unlikely. Ericsson likely to run into antitrust problems, while Huawei would face strong political opposition in France.