20 March 2020
Nokia is reportedly exploring possible strategic options, including possible asset sales or mergers and it has even hired the advisors to get some help on the same. The report comes from Bloomberg that cites a couple of sources familiar with the matter.
Nokia is said to be weighing in the options but Bloomberg’s report points out that these efforts may not result in any transactions. The report speculates that it is possible that Nokia ends up having a merger with Ericsson but there hasn’t been any indication on the same. However, the publication does point out that a merger between Ericsson and Nokia would be difficult, considering the European regulatory agencies are involved.
The unnamed sources cited in the report might not have shared the reason behind the possible merger or asset sales but it is believed that the decision has been made due to the market share loss in 2019. Nokia also doesn’t have any plans to invest further in more profitable 5G products until 2022. This indicates that Nokia is meanwhile making some strategic plans for a smoother execution in the market.
While the Finnish telecom network equipment maker isn’t diverting itself fully to 5G, it expects the market share to remain stable outside China this year. Nokia blamed the fall in profitability on its decision to use more expensive components in its 5G products. And that could be the reason the company is shifting its focus on other major things to bring back itself on the track.
Nokia is now shifting its focus on hardware that should boost margins and competitiveness. Nokia will not start its transition until the older products are entirely phased out in 2022.
Following Bloomberg’s report, Nokia’s shares rose roughly 6% in Wall Street trading, according to Reuters.