Nokia’s Alcatel buy: APJ, India to account for 18% revenue

Finnish firm Nokia’s acquisition of Alcatel-Lucent will create an entity with revenues of $28 billion (about Rs 1.75 lakh crore), with Asia-Pacific, Japan and India (APJ/India) contributing 18 per cent.

Last week, the Finnish telecom gear maker said it will acquire its Franco-American rival in an all-stock deal valued at 15.6 billion euros ($16.6 billion). This will create an entity with a combined market cap of about 45 billion euro (close to $49 billion) and a revenue base of around 26 billion euro (about $28 billion). Based on annualised revenue figures of 2014 fiscal, Nokia earned a revenue of 12.7 billion euro, with 26 per cent (about euro 3.4 billion) coming in from APJ/India. In the case of Alcatel-Lucent, whose 2014 revenue stood at 13.2 billion euro, 10 per cent (about 1.3 billion euro) flowed from APJ/India, according to data with the US Securities and Exchange Commission (SEC). 

If the deal goes through, the firm’s combined revenue base will hit 26 billion euro, with APJ/India contributing 18 per cent or 4.7 billion euro (about $5 billion or close to Rs 31,300 crore). Interacting with reporters after making the announcement, Nokia President and CEO Rajeev Suri said: “Our strengthened presence in all geographies - particularly in the US, China, Europe and Asia-Pacific - would give us the scale and reach to better serve our customers’ global needs.” Nokia Group will lead the new firm -- Nokia Corporation -- with Risto Siilasmaa to serve as Chairman and Suri as Chief Executive Officer. The combined entity will have a headcount of about 1.14 lakh.

The two firms announced that the deal is likely to be completed in the first half of 2016 and will result in 900 million euro of operating cost savings by 2019-end. This can be the biggest deal in the telecom industry since Lucent Technologies acquired Ascend Communications for about $21 billion in 1999 and can be compared with Alcatel’s 2006 purchase of Lucent for $13.4 billion.