Nokia is in the process of buying out Alcatel-Lucent, a rival company that produces network gear. What will this mean for Nokia? A handsome cut in costs and the ability to combine efforts to market one line of 5G technologies, rather than competing with Alcatel-Lucent. What will this mean for consumers? A higher chance of obtaining 5G technologies and devices sooner; there is also a higher chance that the products will be better due to this merger.
Rajeev Suri, the CEO of Nokia, has confirmed that the deal is approaching completion; this buyout was worth over $16 billion. While Nokia was originally spending less than $2.5 billion on research and development, Alcatel-Lucent was spending twice that amount. Sari has said that due to this, there will be an increase in efforts toward investing in 5G technology. Suri projected that this up-and-coming 5G technology will be massively available by 2020.
Current networks are aimed toward servicing traffic from mobile devices and computers. 5G networks, on the other hand, will be optimized to provide service to a much broader range of technologies, such as automobiles, wearable (personal) devices, and a larger amount of business-related communications.
The projected demands for these communications show that 4G will not be able to withstand the future requirements of networks. Sari believes that 2016 will be a significant year, and accordingly, he said that the merger’s timing was very desirable.
In order to formally approve Nokia’s offer, Alcatel-Lucent will need at least half of the shareholders to give their approval. The final date for this potential approval is in little over a month, on December 23. Additionally, Nokia will have a vote for its own shareholders at the beginning of December.
The primary goal for Suri is to “hit the ground running.” If the offer is settled, the deal will not be closed until the first couple of weeks of the New Year. Suri’s fervor, then, must be maintained for several weeks.
While Suri has a positive outlook on the deal, there are instances of early disapproval by some investors of Alcatel-Lucent, who desire to renegotiate for better terms. One such investor is Odey Asset Management, which is Alcatel-Lucent’s second biggest shareholder. It would seem that these investors have a low chance of success in obtaining better terms because the deal only requires willingness from above 50 percent of the shareholders in Alcatel-Lucent. Suri has been unwilling to reveal whether or not the deal had the backing of other crucial shareholders.
This company has recently declared its goal of saving over $965 million. The executives (top 130) for the merged company have been named; over ten-thousand managers will have been chosen to represent the company, according to Suri, who has high hopes for this deal. This confidence is not without justification, for Nokia has demonstrated a high performance financially for the last two quarters, the plans for the merger have been becoming clearer, and a swift influx of regulatory approvals has been occurring. If the high level of motivation that Suri has demonstrated is maintained, his optimism may very well pay off.
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