The telecommunications industry could witness one of the largest mergers of the decade in the near future if the rumors circulate are true. Finnish Nokia and Swedish Ericsson may merge their companies, according to a Bloomberg report.
The report does not mention its sources but indicates that competition is putting pressure on Nokia’s revenues, prompting it to form a team of advisers to come up with solutions. Some of the possible solutions include the sale of certain assets or the merger. It was also reported that other options considered included shifting investments and adjusting the balance sheet.
The merger is only an option and may not be the decision made by Nokia. However, if that happens, it may be easier for Nokia and Ericsson to take Huawei and ZTE to China as the 5G race warms up.
Nokia is currently going through a difficult period. The value of its shares has dropped by a third over the past year, but news of a possible merger has seen it increase by 3%. Bloomberg adds that even if a merger is the option they choose, it won’t be a walk in the park, since a merger of this size will certainly run into obstacles.
Nokia is also making some changes to its management. In early December 2019, it was announced that the president, Risto Siilasmaa would be replaced in April 2020 after 8 years at the helm of the company. His replacement is Sari Baldauf, former head of the networks division.
Nokia reduced its prospects and also suspended its dividend. He says he is making big investments in 5G technology so he can catch up with his competitors, which will affect his income. The company says it does not expect a major profit recovery until 2021.
At the end of 2016, Nokia acquired Alcatel-Lucent. The acquisition took 19 months after it was first announced in April 2015 and has provided the Finnish company with more opportunities outside and inside the telecommunications industry.
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