Nokia Expands its Optical Networking Capabilities with Infinera Acquisition
Nokia, a renowned telecommunications company, has announced its plans to acquire Infinera, a specialist in optical networking services, for a substantial price of $2.3 billion. The acquisition is expected to be completed by 2025, pending approval from shareholders and regulatory bodies.
Infinera, founded in 2000 and headquartered in San Jose, California, is responsible for the production of networking equipment and optical semiconductors. The company’s services cater to cloud operators, carriers, governments, and enterprises worldwide.
Both Nokia and Infinera have expressed their belief that the acquisition will bring significant strategic benefits. These benefits include the enhancement of Nokia’s product roadmap, the acceleration of Nokia’s enterprise expansion, the scaling up of the North American optical market, and the strengthening of Nokia’s capabilities in silicon photonics and photonic integrated circuit technology.
Pekka Lundmark, the President and CEO of Nokia, emphasized the company’s commitment to improving its competitiveness in the optical networks sector. The decision to expand organic investment in this area has already resulted in higher customer recognition, substantial sales growth, and increased profitability.
Infinera’s CEO, David Heard, also expressed confidence in the partnership with Nokia, highlighting the opportunities for innovation and addressing evolving customer needs in the telecom networks and data center sectors. The acquisition will provide greater scale and deeper resources for both companies to capitalize on the growing importance of optics in these industries.
Furthermore, this acquisition aligns with Nokia’s plans to sell its undersea cable company, Alcatel Submarine Networks (ASN), to the French government. By integrating Infinera’s vertically integrated optical semiconductor technologies, Nokia aims to leverage its capabilities even further.
Upon completion of the acquisition, Nokia’s Network Infrastructure Business Group will consist of three distinct entities: Fixed Networks, Internet Protocol Networks, and Optical Networks. This restructuring is expected to result in a decrease of approximately one billion euros ($1 billion) in net sales for the group, but an increase in the operating profit margin by one hundred to one hundred fifty basis points.
In summary, Nokia’s acquisition of Infinera represents a strategic move to strengthen its position in the optical networking market. By leveraging Infinera’s expertise and technologies, Nokia aims to enhance its product offerings, expand its enterprise presence, and capitalize on the growing demand for optical solutions in various industries. This acquisition aligns with Nokia’s overall strategy to improve competitiveness and drive sustainable growth in the telecommunications sector.
