Detailed interpretation of Nokia's acquisition of Alcatel: Giants come back?

I still remember that when Nokia announced the sale of its mobile phone business in 2013, everyone was amazed at how the giant Nokia has mixed up. However, the strong man broke his wrist and did not hurt the body! Nokia still retains the map business and telecom equipment business that can continue to make money.

On the afternoon of April 15th, Beijing time, Nokia and Alcatel-Lucent issued a joint statement, saying that Nokia officially announced the acquisition of Alcatel-Lucent, the acquisition amount will reach 16.6 billion US dollars, and this The cooperation has also been supported by the French government. If the progress is smooth, all the acquisitions will be completed in the first half of next year.

In addition, Nokia and Alcatel will continue to use the Nokia trademark, but will still retain the research and development work of Arambert Labs.

In fact, the rumors of mergers between the two companies have been around for a long time, so the union of the two telecom equipment suppliers with headquarters in Europe is not entirely unexpected.

If the deal is reached, the new Nokia will have a higher strength with Huawei and Ericsson after the merger.

The merger will be completed under pressure

At the end of last month, Huawei released its 2014 annual report. In this eye-catching transcript, we have seen that Huawei has surpassed Ericsson in the global competition for telecommunications equipment and took the top spot. This achievement is still under the policy pressure of Huawei in the North American market. Realized in case. It must be said that Huawei's strong rise has brought tremendous pressure on only a few major telecom equipment manufacturers.

However, according to research firm Bernstein Research, in the global wireless market considerations, the combined Nokia will occupy 35% of the market, ranking second in the market; while the relative industry leader Ericsson has a 40% share. In addition, Huawei has followed the market share of 20%.

The global telecom equipment market is becoming saturated and the growth space is very limited. In the United States, Alcatel is a major supplier of mobile operators AT&T 4G wireless devices, but AT&T's network spending is declining. The deployment of 4G networks in Europe has also stabilized.

After the merger of the two companies, the departments with the same functions can be streamlined to achieve cost reduction.

Why are they

Nowadays, global telecom equipment suppliers have been streamlined a lot before, and only the remaining market share is only Ericsson, Huawei, ZTE, Nokia and Alcatel-Lucent. Ericsson is now accepting anti-monopoly investigations, and obviously will not move the minds of acquisitions; while Huawei and ZTE are suppliers with Chinese background, overseas mergers and acquisitions are actually subject to many restrictions. The only two remaining weakest are Nokia and Alcatel, so to some extent, mergers and acquisitions can only occur between the two companies.

And Nokia has enough reason to buy Alcatel. With the advent of 5G technology and the development of the Internet of Things, the demand for devices for large data streams such as cloud computing is increasing. Only the Netflix family accounts for 35% of the data traffic in the United States. While Nokia has basically failed to make a difference in this market, Alcatel has occupied 20% of the market in this market; in the fourth quarter of 2014, the total sales of Alcatel's IP routing division accounted for 37% of Alcatel's total sales. .

Therefore, this acquisition by Nokia has also greatly filled the gaps in its related business, paving the way for the future development of this market that will obviously continue to grow.

Getting bigger doesn't necessarily become stronger

Alcatel-Lucent and Nokia Siemens are all complexes created in the wave of mergers and acquisitions in the telecom market a decade ago, but the two companies that have merged have not become stronger in the past decade. In the gap in their busy business integration, competitors attacked, causing them to lose some market share, and the company's market value suffered losses.

Clairinvest's fund manager, Ion-Marc Valahu, also expressed doubts about the value of the deal: "They may say that they can cut some costs, but just combining a weaker company with another weaker company may not necessarily Become a stronger company."

Therefore, the joint venture, which can be called "Nokia-Siemens-Alcatel-Lucent" after the merger, may continue its development in the past decade and suffer from the market's shrinking doom. Since there are only four oligarchs left in this market, the only way to maintain this pattern is by administrative means, but in the global market, the role of economic law is always greater than the influence of administrative means. Therefore, the future development of these two companies will require more consideration.

Impact on the market

Analysts say that despite the high concentration of the telecommunications equipment market, suppliers have been unable to influence pricing power recently. If Nokia merges with Alcatel, it may have a competitor that is comparable in size to the industry leaders Ericsson and Huawei. As these three companies compete for each other, they may drive down prices.

US carriers have expressed support for the merger of Nokia and Alcatel-Lucent. An executive at a US mobile operator said that fewer vendors could simplify the technology roadmap, making the problem easier, while giving the combined company a stronger capital to develop new products.

Of course, lower prices may also put pressure on small equipment manufacturers to survive, making market oligarchy more serious; and fewer equipment suppliers mean simpler technology routes, which is the realization of the future Internet of Things. A big gospel.

postscript

Nokia’s acquisition of Alcatel does not actually bring about a fundamental change in this gradual and stable market, and even makes this market more stable. In fact, we can foresee that telecom equipment will be mainly for a long time to come. Suppliers will not start mergers and acquisitions again.

So after this big move, Nokia is turning the salted fish over, or it’s still a long time, and it’s time to test it.


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