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Nokia struggles heavy lifting with integration of the wireless business


Nokia’s CEO Rajeev Suri stated that acquiring Alcatel-Lucent is moving well ahead. On the other hand, the individual wireless business integration of the company is considered as one of the most difficult phases they’ll be facing. Suri also said that the merged company will provide greater offers along with a more comprehensive set of services compared to its major competitor, Ericson.

According to Suri, who will be sitting in the CEO position of the combined company, the vendors are "very much on track" in closing the transaction in the first half of 2016 and are still waiting for China’s approval, as well as that of the government of France and “a couple of tiny” countries he did not specify.

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The Nokia CEO said that the company is anticipating to complete an over $1 billion (€900 million) in a full-year basis operation with cost synergies in 2019. He also mentioned, that Nokia is anticipated to slash general and administration expenses, as well as in wireless radios, research and development, procurement and probably in sales.

Furthermore, Suri explained that in having a large merger similar to Nokia/Alcatel-Lucent, "the challenge is always around culture. I think thats often underestimated because people focus on the substance and the practical, soft steps go missing. Not many integrations of such scale have succeeded."

In the previous week, the company unveiled a new set of leadership team as well as organizational structure for the post-merger. The strong leadership team consists of 13 members, 10 of which will come from Nokia. To make the integration more effective, the company will have “clear governance”, Suri mentioned.

He said, "Another big difference is the overlap in only one part of the business. Everything else is complementary." He also added, "I dont have IP. I dont have transport. I dont have fixed [assets], so I dont need to integrate them."

Basically, Suri explained that "radio is where the heavy lifting will take place in wireless and thats where we need to integrate and there of course will be some struggles during the process."

The new company will have four divisions, which include mobile networks, fixed networks, applications and analytics, and IP/optical networks. For financial reporting, these divisions will be grouped into the “Networks” business unit. Therefore, Nokia will continue as a single entity and will remain under the leadership of Ramzi Haidamus who serves as president of the division.

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Moreover, mobile networks will include both companies’ radio portfolios, as well as their core portfolios such as IMS and voice over IP (VoLTE), subscriber data management, along with the related global services business. The current EVP and chief financial operating officer of Nokia Networks Samih Elhage will take over the position of president to handle the division.

On the other hand, the fixed networks will bring in Alcatel-Lucent’s current fixed-networks business and will be taken over by Federico Guillén as president. Currently, Guillén is Alcatel-Lucent’s fixed network president, while BhaskarGorti has been serving as a IP platforms president and is designated to act as the new president of applications and analytics. The software along with the data analytics-related operations of the merged companies will be combining the two operations.

The merging of Nokia/Alcatel-Lucent will be settling a better position in certain respects over Ericson, with an emphasis on fixed networks. He said, "Our portfolio is more end-to-end than Ericssons and it is more like Huawei."

He also added, "Both of us are more end-to-end because we have IP, fixed, transport, mobile and the applications and analytic business on top. If you think about Ericsson it lacks some of this. It doesnt have IP, doesnt have fixed, and doesnt have that credibility in transport. So we are the Western alternative to Huawei."

The spokeswoman of Ericson refused to give comments on this matter.

As Nokia is having difficulty related to the integration of the individual wireless business of Alcatel-Lucent, you can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates on our official website, Trade12.com. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you develop a keen understanding of certain trends involving stocks, currencies, indices, commodities, and metals.

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