Nokia Sells Majority Stake in Alcatel Submarine Networks to French State

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DateJun 27, 2024

Nokia has announced a strategic move to sell itsAlcatel Submarine Networks (ASN)division to the French State, represented by the Agence des participations de l’Etat (APE). This sale is part of Nokia’s broader strategy to focus on its core markets and improve profitability within its Network Infrastructure portfolio.

The deal, subject to the standard employee consultations and regulatory approvals, will see Nokia retain a 20 percent shareholding in ASN, ensuring a smooth transition period before the French State acquires the remaining interest. Financial details of the deal were not disclosed.

The divestiture of ASN would align with Nokia’s strategy to actively manage its business portfolio, which is one of the six strategic pillars of the company. By selling ASN, Nokia aims to hone in on growth opportunities within its primary sectors and enhance the profitability of its Network Infrastructure business group. This reorganization means that starting in the second quarter, ASN will be accounted for as a discontinued operation.

Moving forward, Nokia’s Network Infrastructure Business Group will be streamlined to include three units: Fixed Networks, IP Networks, and Optical Networks. While this will reduce the net sales of the Network Infrastructure by approximately EUR 1 billion, it is expected to increase the operating profit margin by 100 to 150 basis points. Importantly, this restructuring does not impact Nokia‘s previously stated financial outlook from its Q1 2024 financial report.

Under Nokia’s ownership, ASN, a pioneer in undersea communication networks globally, has prospered and seen a notable increase in income, according to Nokia itself. With its distinct positioning in the turnkey solutions industry, ASN would be well-positioned to capitalize on the growing need for subsea cables. The importance of these connections to the world’s communication infrastructure would be growing, which can make ASN a useful resource.

A Strategic Step Forward for Nokia

The French State is thrilled to announce its willingness to acquire 80% shareholding of ASN, said Bruno Le Maire, French Minister of Economy.The decision to sell ASN to the French State follows extensive discussions, concluding that the French State is the most suitable custodian for ASN’s future. The French State’s long-term interest in critical infrastructure would ensure stability for ASN’s operations, benefiting customers, employees, and partners alike. The French State has pledged full support for ASN’s management and strategy, committing to maintaining investment in the business and fostering the sustainable development of its technology offerings.

The APE, which manages a diverse portfolio of holdings across various sectors, will oversee ASN’s integration and future operations. This move would secure the presence of a robust French and European player in the globally competitive submarine networks market.

The sale is anticipated to close by the end of 2024 or early 2025, pending the formal consultation with ASN’s French Works Council and other customary conditions and regulatory approvals. Pekka Lundmark, President and CEO of Nokia, emphasized that this divestment is a strategic step forward for Nokia, allowing the company to streamline its Network Infrastructure portfolio and concentrate on growth and technology leadership. He expressed confidence in the French State as the natural owner for ASN, ensuring continued investment and protection of critical industry know-how.

Alain Biston, President and CEO of ASN, echoed this sentiment, highlighting the exciting opportunities this transition presents for ASN’s future development. The stable platform provided by the French State, combined with Nokia’s retained stake, aims to ensure a smooth transition benefiting all stakeholders, including customers and suppliers.

French Minister of EconomyBruno Le Maire expressed enthusiasm for the acquisition, recognizing ASN as a world leader in the submarine cable market and a crucial European asset. The French State’s involvement is poised to secure ASN’s future as a key player in the global market.

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