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Nokia to Sell Submarine Network Business to France in $375M Deal
June 28, 2024
Nokia is set to divest its undersea internet cable business, Alcatel Submarine Networks (ASN), to France for €350 million ($375 million). The deal will initially transfer 80% of ASN to the French government, with Nokia retaining a 20% stake to ensure a smooth transition. The sale is expected to be completed by early 2025, after which France will acquire Nokia’s remaining stake.
Nokia’s decision is underscored by the significant investments required for undersea cable projects, as illustrated by Google’s recent $1 billion investment in new Pacific internet connections. Additionally, the vulnerability of undersea cables, highlighted by damages in Europe due to the Russo-Ukrainian conflict and in the Red Sea from regional conflicts, poses operational risks.
Despite the increasing global demand for submarine internet cables, Nokia has decided to sell ASN as it considers the unit a “non-core standalone business.” The company aims to redirect resources towards more lucrative growth opportunities. Although divesting ASN will reduce Nokia’s annual revenue by about €1 billion, it is expected to improve overall profit margins by 1 to 1.5 percent.
Operating under the French government is anticipated to benefit ASN due to Alcatel’s historical significance in France. Nokia believes this transition will ensure ASN’s sustained operations and growth under a familiar national brand. The deal reflects Nokia’s strategic shift towards focusing on higher-margin business areas, while France will bolster its technological infrastructure through the acquisition of a critical telecommunications asset.
This transaction stems from Nokia’s acquisition of Alcatel-Lucent in 2016, a merger that included ASN’s vast network of approximately 800,000 kilometers of undersea cables. Originally, Alcatel-Lucent was formed from the merger of French telecom Alcatel and Lucent Technologies in 2006, the latter having roots in AT&T’s supplier Western Electric and the innovative Bell Labs.
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