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Nokia heads into the data centre with $2.3bn Infinera buy  

Nokia heads into the data centre with $2.3bn Infinera buy  

Business news |
By Nick Flaherty



Nokia is to acquire US optical networking specialist Infinera in a deal worth $2.3bn to drive its technologies into the data centre.

The Infinera deal follows the restructuring of the Nokia optical networks with the sale of 80% of the Alcatel Submarine Networks to the French government for €350m.

The deals will create a reshaped Network Infrastructure built on Fixed Networks, IP Networks and Optical Networks.

“Together we will have greater scale and deeper resources to set the pace of innovation and address rapidly changing customer needs at a time when optics are more important than ever – across telecom networks, inter-data centre applications, and now inside the data centre,” said David Heard, CEO of Infinera.

“This combination will further leverage our vertically integrated optical semiconductor technologies. Furthermore, our stakeholders will have the opportunity to participate in the upside of a global leader in optical networking solutions.”

The combination will increase the scale of Nokia’s Optical Networks business by 75%, enabling it to accelerate the breadth of its product roadmap and accelerate the timelines. This also expands the digital signal processor (DSP) development team, expertise across silicon photonics and indium phosphide-based semiconductor material sciences, and deeper competency in photonic integrated circuit (PIC) technology.

At least 70% of the consideration for Infinera will be paid in cash and Infinera’s shareholders can elect to receive up to 30% of the aggregate consideration in the form of Nokia US shares.

“In 2021 we increased our organic investment in Optical Networks with a view to improving our competitiveness. That decision has paid off and has delivered improved customer recognition, strong sales growth and increased profitability,” said Pekka Lundmark, President and CEO of Nokia.

“We believe now is the right time to take a compelling inorganic step to further expand Nokia’s scale in optical networks. The combined businesses have a strong strategic fit given their highly complementary customer, geographic and technology profiles.”

Federico Guillén, President of Network Infrastructure at Nokia, said: “Today, Network Infrastructure offers a unique portfolio across the fixed access, optical and IP networks domains built on leading technology innovation and a strong customer focus. This acquisition will further strengthen the optical pillar of our business, expand our growth opportunities across all our target customer segments and improve our operating margin. I am extremely pleased that we are bringing together these two talented and dedicated teams. Separately, we have long respected each other as competitors. Together, we find the logic of combination irresistible.”

The two companies have limited customer overlap, putting the combined business in a strong position in all regions except China. Infinera has built a solid presence in the North America optical market, representing ~60% of its sales, which will improve Nokia’s optical scale in the region and complement Nokia’s strong positions in APAC, EMEA and Latin America.

www.nokia.com; www.Infinera.com

 

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