Nokia has strategically entered an option to sell Alcatel Submarine Networks (ASN), its submarine networks business, to the French State, represented by the Agence des participations de l'Etat (APE) for $375 million.
The sale, which is expected to be finalized by the end of 2024 or the beginning of 2025, is contingent on informing and consulting with the relevant employee representatives at ASN and Nokia. Nokia will retain a 20% shareholding with board representation to ensure a smooth transition until the targeted exit, at which point the French State will acquire Nokia’s remaining interest.
By selling ASN, a non-core standalone business for Nokia, Nokia said it could focus its Network Infrastructure portfolio on growth opportunities in its core markets and further improve the profitability of the Network Infrastructure business group. Further, Nokia contends that the transaction demonstrates Nokia’s active management of its business portfolio, which is one of its six strategic pillars.
“This is a good step forward in our strategy of actively managing our portfolio. ASN has been a standalone part of our Network Infrastructure business,” said Pekka Lundmark, president and CEO of Nokia. “Through the divestment, Network Infrastructure will benefit from a streamlined portfolio focusing on growth and strengthening its technology leadership.”
The timing of this deal comes as Nokia looks to enhance its optical networking market position with a pending deal to acquire Infinera.
In the second quarter, Nokia expects to account for ASN as a discontinued operation.
Nokia’s Network Infrastructure Business Group will comprise three units: Fixed Networks, IP Networks and Optical Networks. This is expected to reduce the net sales of Network Infrastructure by approximately EUR 1 billion ($1.7 billion) but will increase its operating profit margin by 100 –150 basis points.
Under Nokia’s ownership, ASN has significantly grown revenues and is well positioned to continue benefiting from the growth of the large and attractive subsea cables market, as the demand for and importance of subsea cables has increased.
Nokia’s proposed sale of ASN to the French State was based on extensive discussions, which concluded that the French State is the most relevant custodian of ASN. The French State said it would ensure continuity for ASN customers, employees, and partners.
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