Possible asset sales or merger for Nokia

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Nokia is exploring strategic options, which include possible asset sales or mergers and has hired advisors to weigh its options, according to a new report from Bloomberg

5G pressure 

In October last year, Nokia slashed profit outlook and the stocks dropped 21% - profits came under pressure due to the company spending acceleration on its 5G networks. Additionally, earlier this month, Nokia warned investors that it would not complete its transition to more profitable 5G products until 2022, so the information in the report doesn’t come as a shock.

Merger speculation

Earlier this month, US Attorney General William Barr said the US and its allies should consider investing in Nokia and Ericsson to counter Huawei’s dominance in 5G technology, which caused speculation of possible merger and acquisition activities. 

The possibility of a merger between with Ericsson is discussed in the Bloomberg report but points out that it would be difficult due to all the all the European regulatory agencies that would be involved.

Indeed as Huawei, Ericsson and Nokia are the world’s biggest wireless networking equipment suppliers, competition has been exceptionally fierce over 5G equipment contracts from the operators. However, three vendors is the bare minimum required to keep competition alive in the industry and large telecom operators usually aim to use several suppliers for their networks. A merger between Nokia and Ericsson may well be seen as anti-competitive. 

It’s worth noting that this was speculation as the report doesn’t indicate discussions are taking place between Finland’s Nokia and Sweden’s Ericsson. Similarly, just because Nokia has hired advisors to weigh its options, transactions may not happen.

Nokia shares rise 

At the end of 2019, Nokia had around 27% of 4G and 5G radio access networks outside China and has said it aims to finish 2020 with the same share of business and provide updates in its quarterly earnings reports this year.

Despite Nokia's shares having been trending downward for the past year, in the hours following Bloomberg's report they increased by roughly 6%. 

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Rachael Sharpe

Rachael is a British journalist with 17 years experience in the publishing industry. Since launching www.digitalcameraworld.com, she’s been freelancing, and working for some of the world’s best-loved websites and magazines including T3.com and TechRadar.com and has also had a book, iPad for Photographers, published. A regular contributor at 5Gradar, Rachael is following the 5G market closely. Find out more at www.rachaelsharpe.com