Nokia CEO Says Alcatel Buy Will Increase Its 5G Firepower

Nokia’s planned takeover of rival network gear maker Alcatel-Lucent will give it far greater scope to invest in new technologies like 5G mobile equipment while cutting costs, its chief executive said on Wednesday.

Rajeev Suri also told Reuters in an interview that the Finnish company was making rapid progress towards closing the acquisition, originally valued at EUR 15.6 billion (roughly Rs. 1,09,873 crores).

The deal coincides with a major new industry investment cycle set to kick off next year to develop the next generation of 5G networks that are expected to start going mainstream around 2020, Suri said.

French-American company Alcatel-Lucent spends around EUR 4.7 billion on research and development, while Nokia spends less than half that. “We have more scale to invest in 5G than we would had alone,” Suri said.

5G equipment will be needed to handle the projected data demands of connected cars and industry, while making cities more secure and enabling new wearable communications devices. Current 4G networks handle mostly phone and computer traffic.

“The next year is the key, this is why the timing of our acquisition is good,” Suri said. In the 4G era, the two separate companies had two different portfolios, but with the merger, it will be able to invest in and market a single 5G product line.

Suri was speaking on the first day of Nokia’s public exchange offer to Alcatel-Lucent investors, for which the company needs a simple majority of more than 50 percent of shareholders to accept by the closing date of December 23.

Nokia shareholders hold a separate vote on the deal on December 2, clearing the way for the deal to close some time in the first quarter, the company has said.

“Mentally, we want to hit the ground running,” Suri said. “For us, the deal closes when we get more than 50 percent” of Alcatel-Lucent shareholders accepting the deal, he said.

Settlement of the offer and holidays mean the earliest the deal could close would be some time after the first week of 2016.

A handful of Alcatel-Lucent investors including second largest holder Odey Asset Management had called for better terms after its results earlier this year were markedly better than Nokia’s.

But few expect this to succeed since the deal is structured as a tender offer, requiring only a majority of Alcatel shareholders to be willing to sell. Suri declined to comment on whether other major shareholders were ready to back the deal.

Late last month, the company brought forward its EUR 900 million cost-saving target for deal by a year to 2018. Last week it named the combined company’s top 130 executives. Suri said he plans to have more than 10,000 managers selected from between the two companies by the time the deal closes.

Rapid regulatory approvals, greater clarity on merger integration plans, and a strong financial performance in the past two quarters fuels his confidence. Last month, it also announced plans to return $4.4 billion (roughly Rs. 29,088 crores) to shareholders in coming years through dividends and share buybacks.

Pakistan Causing Mobile Interference in Jammu and Kashmir

Pakistan is resorting to cellular interference in some areas of Jammu and Kashmir and operators working in the state have taken up the issue with the Centre, a leading telecom company Thursday said.

“We have highlighted the issue with the government and the government is supporting us on that. There is the issue of interference and the government will find a solution to it shortly,” Anil Gupta, Regional Business Head, North, Aircel, told reporters here.

Gupta said after the issue was raised by telecommunications companies operating in the state, the Centre has started testing the interference in the areas where such frequency is high.

“We had received complaints about poor services in some areas because of the interference. Testing of the interference in those areas has been done and government is supporting us in testing. So, we are trying to see how best we can offer the services to our customers in those areas,” he said.

He said the company was also addressing the issue of call drops at the national level.

“It is a normal thing which happens due to various reasons primarily due to expansion. But we are addressing the issue at the national level,” Gupta said.

Earlier, the company launched two innovative products for rapid growth of Internet adoption in the state.

Claiming the products were the first of their kind, Aircel introduced ‘Free basic Internet’ for all new subscribers and ‘Unlimited data’ at the rate of Rs. 9 per day for the existing customers as part of the telecom operator’s strategy to push mobile Internet usage. Gupta said the product has been specially designed keeping in view the dramatic increase of mobile data users, for whom it is as much a part of their daily lives as voice calling.

“With this new product, all new prepaid customers will be able to now browse and actively use their favourite applications such as WhatsApp, Facebook, Twitter, besides also accessing their daily need applications for banking and travel, utility bills payments, etc.

“The offer is aimed at fuelling mobile Internet adoption in J-K, keeping in view that a considerable population of about 60 percent of our mobile phone users is still offline,” he said.

The company also offered unlimited data – both 2G as well as 3G at Rs.9 per day.

“We firmly believe that Internet is for all and through our constant efforts of innovating products and services, we aim to make Aircel a gateway to the Internet for many. Free Basic Internet was created with that thought and is in line with our promise of ‘doing a little extra’ for our subscribers.

“We are confident that it will not only greatly ease the pockets of our new customers, but also help us fuel Internet adoption in the state for those who still are not online. This is clearly a reflection of our vision to empower all our customers with easily accessible and affordable Internet,” Gupta said.

He said the free basic Internet will be given to the new customers for the first three months.

Nokia Remains Bullish About Africa Business Despite Economic Slowdown

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Finnish network equipment maker Nokia remains upbeat about its growth prospects in Africa despite a slowdown in many of the continent’s fastest-growing economies, a senior company executive said on Thursday.

Nokia, which sold its once-dominant mobile handset business to Microsoft in 2014, deals in Africa mostly with telecommunications operators and governments, both of which have been hit by weaker currencies and slower economic growth.

But a growing wave of consolidation in the sector is forcing mobile operators to step up investment to take advantage of the spectrum they gain, said Nokia Solutions and Networks head for Southern Africa Deon Geyser.

“Worldwide growth is flattish, but Africa is a pocket of growth for us,” he told Reuters in an interview on the sidelines of the AfricaCom conference.

The region Geyser manages, which stretches from South Africa to Tanzania, is heavily dependent on commodities exports, and Geyser said the fall in the oil price had “hit a few key economies and subsequently the way they invest.”

However, he said fundamental technology trends remained unchanged and the company was “bullish” about Africa.

“You still have a significant amount of voice growth, even though revenue is flat, and you still have significant growth in data,” he said.

Nokia’s dominant networks division last month reported total net sales of EUR 2.88 billion (roughly Rs. 20,431 crores) in the third quarter, down two percent from a year earlier but up five percent from the second quarter.

Out of that total, the networks division reported net sales of EUR 298 million in the Middle East and Africa in the third quarter, up six percent from a year earlier and up one percent from the previous quarter.

GDP growth in oil-rich Angola is forecast to fall to below 4 percent this year from 12 percent three years ago, while Zambia is also set slow to around 4 percent on the low copper price.

But these numbers won’t derail the general trajectory of telecoms spending on the continent, Geyser said.

“The consolidation on the continent will be good for us,” he said.

Nokia has launched an offer to take over rival network gear maker Alcatel-Lucent in a deal originallyvalued at EUR 15.6 billion.