In a strategic move to streamline its portfolio, Nokia has announced plans to sell Alcatel Submarine Networks (ASN) to the French government. The telecommunications giant will initially retain a 20% stake in the company, with the intention of a full exit in the future. This decision aligns with Nokia’s focus on core markets and its goal to improve profitability in its Network Infrastructure business group.
The proposed sale, which is subject to employee consultation and regulatory approvals, is expected to close by late 2024 or early 2025. The French State, represented by the Agence des participations de l’Etat (APE), has been deemed the most suitable custodian for ASN, given its long-term interest in critical infrastructure operations and maintenance. This move is anticipated to ensure continuity for ASN’s customers, employees, and partners.
Following the divestment, Nokia’s Network Infrastructure Business Group will be restructured to comprise three units: Fixed Networks, IP Networks, and Optical Networks. While this reorganization is projected to reduce the group’s net sales by approximately €1 billion, it is expected to boost its operating profit margin by 100-150 basis points. Nokia has stated that this transaction will not affect its previously announced financial outlook for 2024.
Key points:
- Nokia to sell ASN to the French government, retaining a 20% stake initially
- Sale aligns with Nokia’s strategy to focus on core markets and improve profitability
- Transaction expected to close by late 2024 or early 2025, subject to approvals Nokia’s Network Infrastructure group to be restructured into three units
- Deal expected to reduce net sales but increase operating profit margin
Pekka Lundmark, President and CEO of Nokia, said: “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 and through the divestment, Network Infrastructure will benefit from a streamlined portfolio with a focus on growth and strengthening its technology leadership. ASN has gone through a significant transformation in recent years and has a strong market position. I am pleased we have found a natural owner for the business. The French State will ensure continued investment in ASN and protection of critical industry know-how.”
Alain Biston, President and CEO of ASN, said: “This is an incredibly exciting moment for ASN as we undertake the next phase of our development. The French State’s ownership gives us a stable platform to further develop our vertically integrated technology offering. This, combined with Nokia’s retained stake, underscores all parties’ aligned interests in delivering a smooth transition for the benefit of our customers, suppliers and other stakeholders.”
Bruno Le Maire, French Minister of Economy, said: “The French State, represented by the Agence des Participations de l’Etat (French shareholding Agency), is thrilled to announce its willingness to acquire 80% shareholding of ASN. The Company is one of the world leaders in the submarine cable market, and the only company of its kind in Europe.”
- Alcatel Submarine Networks (ASN) has a rich history dating back to the first submarine cables for telegraphs in the 1860s and 1870s.
- Over the decades, through various mergers and acquisitions, ASN has evolved into a global leader in undersea communication networks. In recent years, ASN has been at the forefront of major submarine cable projects worldwide.
- One of its most notable achievements is the SEA-ME-WE 5 (South East Asia-Middle East-Western Europe 5) cable system, completed in 2016. This 20,000-kilometer cable connects Southeast Asia to Europe, enhancing connectivity across 17 countries.
- Another significant project is the Dunant cable, a joint venture with Google, stretching 6,600 kilometers across the Atlantic Ocean between Virginia Beach in the United States and Saint-Hilaire-de-Riez in France.
- ASN has also been instrumental in developing innovative technologies for the submarine cable industry. The company has pioneered advancements in fiber optic technology, amplification systems, and cable protection methods. Its contributions have been crucial in meeting the ever-increasing demand for global data transmission capacity, supporting the growth of internet usage, cloud computing, and international telecommunications.
Timeline
- 1923: Submarine Telegraph Company (STC) is founded in Paris, France, to lay underwater cables for telecommunications.
- 1954: STC merges with Compagnie Française de Télécommunications (CFT) to form Compagnie Générale de Télécommunications (CGT).
- 1969: CGT creates a dedicated submarine cable manufacturing division, which becomes known as Submarine Systems (SS).
- 1985: Alcatel is formed through the merger of CGT and ITT Corporation’s European telecom activities.
- 1987: Alcatel acquires Submarine Systems (SS) and renames it Alcatel Submarine Networks (ASN). 1990s: ASN becomes a leading player in the submarine cable industry, providing turnkey solutions for fiber-optic cable systems.
- 1998: Alcatel acquires Vitrove, a French fiber-optic component manufacturer, and incorporates its technology into ASN’s products.
- Early 2000s: ASN faces increased competition from other telecom equipment manufacturers, including Huawei.
- 2006: Alcatel merges with Lucent Technologies to form Alcatel-Lucent.
- 2013: Nokia acquires Alcatel-Lucent, including ASN, and merges it with its own submarine cable business.
