Chinese Authorities Give Nokia Go-ahead in Alcatel-Lucent Acquisition


The Chinese government has given the go ahead to Nokia’s acquisition of competitor Alcatel Lucent albeit with conditions. The Chinese Ministry of Commerce gave its green light to the deal culminating the deal’s anti-trust process according to Reuters. The Chinese government also stipulated certain conditions regarding use of wireless telecommunication standards and patent licensing, which Nokia says it will meet by December 10th 2015.  The conditions are meant to enforce China’s anti-monopoly regulations, which seek to ensure the deal does not unsettle the market competition. Nokia is set to  enter into a joint venture with State-owned company Huaxin focusing on the Chinese market.  

The Chinese government’s move follows a similar one by the European Commission which gave its approval to the deal. The EU said Nokia and Alcatel Lucent were not close competitors and would still face stiff global competition even after signing the deal. According to the EU, the planned merger will offer a combined market share of around 35% for several specific types of equipment but there are overlaps between the two companies’ activities are effectively limited where Nokia has strong presence in some markets and weak in others where Alcatel-Lucent is stronger. 

okia will pay $16.6 Billion for the deal,which will propel Nokia second with a global market share of 5 percent, behind Sweden’s Ericsson with 40 percent and ahead of Huawei’s 20 percent.  The company will have a total of 114,000 employees and combined sales of around 26 billion euros. Nokia will give  French company Alcatel-Lucent shareholders 0.55 shares in the combined company for each of their old shares, resulting in 33.5 percent of the entity being in Alcatel shareholders.  The deal will be finalised in the first half of 2016. Nokia also acquired Alcatel-Lucent’s famous Bell Laboratories (established by Alexander Graham Bell in 1880) along with its numerous patents.