Nokia has reportedly taken steps to protect itself against a hostile takeover as it struggles to find a path to profitability as the market transitions to 5G.
According to reports, Nokia has enlisted the services of Citi to guard against an attempt to acquire part or all of its business. Shares in the company rose by 12.5 per cent as investors salivated at the prospect of a deal worth up to $17.4 billion.
Nokia declined to comment on the speculation which has grown since February, when a separate report in Bloomberg suggested the firm was exploring a merger or sale of assets.
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The Finnish network giant competes with the likes of Huawei, Ericsson, Cisco and Samsung in the 5G equipment sector, and believes its end-to-end capabilities are a key differentiator.
Nokia says procuring equipment, software and services from a single vendor can reduce total cost of ownership by more than 20 per cent and reduce time to market by at least 30 per cent when compared to a multi-vendor strategy.
However, the high cost of developing 5G technology and intense competition in the sector has resulted in the firm cutting its financial outlooks and pausing dividends in recent times. A source told Reuters that the speculation was unfounded.
Shortly after the report appeared, it was confirmed CEO Rajeev Suri would step down on September 1 to be replaced by Pekka Lundmark. Nokia said at the time that this was part of an existing succession strategy.
The US government, eager to decrease the influence of Huawei, has suggested that an American company could take a stake in a European telecommunications equipment manufacturer. However Cisco has ruled itself out, stating the lower-margin nature of the telco market did not suit its business model.
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Via Reuters
