Nokia and Infinera said they see a significant opportunity in merging to improve scale and profitability and enable the combined business to accelerate product development.
The deal supports Nokia’s strategy of technology leadership in optical and will also increase its exposure to webscale customers, the fastest-growing segment of the market.
It follows the sale of Alcatel Submarine Networks, which was announced just yesterday.
The sale of ASN combined with the acquisition of Infinera begins a new chapter for Nokia’s Network Infrastructure business, which will be built around three core pillars, Fixed Networks, IP Networks and Optical Networks.
The combination with Infinera is projected to accelerate Nokia’s journey to a double-digit operating margin in its Optical Networks business, with the Finnish company targeting €200 million of net comparable operating profit synergies by 2027.
“In 2021 we increased our organic investment in Optical Networks with a view to improving our competitiveness, Pekka Lundmark, CEO of Nokia explained.
“That decision has paid off and has delivered improved customer recognition, strong sales growth and increased profitability,” he continued.
Following on from this success, Lundmark said now was the right time for inorganic growth, a step to further expand Nokia’s scale in optical networks.
Lundmark also said he believes the combined businesses have a strong strategic fit given their highly complementary customer, geographic and technology profiles.
Infinera’s CEO, David Heard, echoed Lundmark’s view that a tie-up makes sense.
“We believe Nokia is an excellent partner and 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,” Heard said.
