Nokia Oyj is contemplating the potential sale of HERE, its online mapping services, as the Finnish business focuses on reigniting growth at its wireless network unit while enhancing its credit rating, according to sources familiar with the issue.
The communication and information technology group has hired a financial adviser to explore the possible sale of the unit, a source added. After divesting its phone unit to Microsoft, Nokia has three remaining units operating: the maps, R&D, and networks divisions.
Uber Technologies Inc. is said to have been courted by Nokia as a potential buyer. Some private equity groups and other German automakers are also trying to bid for the business. The proceedings may begin before the month ends.
According to Nokia's financial statements, the HERE maps service is currently worth about €2 billion ($2.1 billion). The amount suggests the value of Nokia's mapping business unit has gone down since 2008, when the company spent $8.1 billion to buy Navteq Corp, a map provider business group.
Nokia, which is currently valued at €28 billion ($29.66 billion), may choose against a deal if it will not get its target price, the sources suggested.
HERE registered full-year sales of €970 million ($1 billion), including an operating loss of €1.24 billion ($1.31 billion) based on the company's annual report. In January, Nokia predicted an increase in sales for its maps and patents divisions for 2015.
Sebastien Sztabowicz, an analyst at Kepler Cheuvreux in Paris, believes earnings from a sale of the HERE maps business could be used for acquiring assets to grow Nokia's networks division. Part of Nokia's plans may include possible takeover and merger talks with French counterpart Alcatel-Lucent, which has an estimated value of about €10.8 billion ($11.44 billion).
"We believe a sale of the mapping business could give further credibility to the scenario of an offer on Alcatel-Lucent's wireless access business," Sztabowicz wrote in a letter to clients.
Sean Fernback became the head of the maps business following the departure of Michael Halbherr, who reportedly had disagreements with Nokia CEO Rajeev Suri regarding decisions pertaining to the unit. Sources said the unit was torn between simply catering to enterprise and automotive clients or targeting consumers as well.
In January, Nokia posted a 2014 Q4 net income of €443 million ($469 million).
Photo: Bjørn Heidenstrøm | Flickr
