Will NSN Merge with Alcatel-Lucent?

Zacks

A recent report in LightReading stated that a potential consolidation is waiting in the telecom network infrastructure manufacturers industry. LightReading hinted at the prospect of a merger between two network gear makers, namely, Nokia Solutions and Networks (:NSN), a division of Nokia Corp. (NOK) and Alcatel-Lucent S.A. (ALU).

The telecom service provider industry, particularly in the North American region is going through a wave of consolidation. Therefore, it may be a logical conclusion for the telecom network gear markers to begin consolidation to attain adequate economies of scale, cost synergies and geographical expansion. Currently both Nokia and Alcatel-Lucent have a Zacks Rank #3 (Hold). 

The combination of Nokia Solutions and Networks and Alcatel-Lucent may create a formidable player in the industry with a significant customer base on a global basis and huge operational efficiencies. The merged entity may pose severe competitive threat to the large telecom network infrastructure gear makers, such as LM Ericsson AB (ERIC), Cisco Systems Inc. (CSCO) and Huawei Technologies Co. Ltd.

Nokia Solutions and Networks has a strong technical efficiency in professional managed services, customer experience management together with a rich portfolio of mobile broadband infrastructure and 4G LTE networks. On the other hand, Alcatel-Lucent has a relative advantage in IP-based products, optical networking, cloud computing/software-defined networking, fixed broadband network and professional services.

Recently, Nokia Solutions and Networks entered into a deal with content delivery network operator CDNetworks to accelerate the delivery of mobile content. Liquid technology is a software solution for network infrastructure that drastically reduces the need for dedicated hardware. The company stated that its new Liquid Applications will change the competitive landscape of the telecom infrastructure gear market by revolutionizing base stations.

Similarly, Alcatel-Lucent recently collaborated with Qualcomm to develop small cell base stations that enhance 3G, 4G and WiFi networks to improve wireless connectivity in both residential and business enterprise segments.

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