Nokia is hard at work to make a comeback in the industry. The Finnish company will focus on the production of telecom equipment, taking over Alcatel-Lucent with a $16.6 billion bid by early 2016.
Rewind a couple of years ago, the mobile phone maker used to be at the pinnacle of the market with a market capitalization that reached about $250 billion. However, with the fast-changing times in technology, the company failed to keep up with the emergence of smartphones, and as a result, it handed the phone segment of its business to Microsoft.
Getting back to the present, Nokia intends to redefine itself through telecom equipment. The company aims to manufacture components that will be able to power global networks, such as Deutsche Telekom.
Shareholders of Nokia will hold a meeting in Helsinki, Finland, on Wednesday to confirm the deal. On the other hand, through a share-swap agreement, Alcatel-Lucent shareholders are expected to extend their support as well, leaving them with approximately a one-third stake.
"When I took over, we were on the brink. Being able to pull off an acquisition that might make us no. 1, now that's pretty exciting. Through the deal, we'll grow our relevance with our customers. We'll have the size to become a strategic partner," Nokia CEO Rajeev Suri says, adding that the takeover is necessary to rework the company.
According to analysts, the pair will work well together. Nokia has the expertise in wireless networks, whereas Alcatel-Lucent has the proficiency in routers and broadband network materials.
It's also worth mentioning that this isn't exactly a merger, as Nokia set up the deal to be a takeover, where the Finnish company's executives would take lead management positions.
Considering how sales of Nokia have declined, the company is in for a huge overhaul before it'll shoot up in the industry again, not to mention that carriers such as Verizon Wireless are hesitant in making investments in mobile networks.
