Nokia has officially closed the sale of its subsea cable unit, Alcatel Submarine Networks (ASN), to the French State. This move, finalized in late December, has generated approximately €350 million ($363 million) for the company. Nokia confirmed that it will retain a 20% stake in ASN, maintaining board representation to ensure a seamless transition. The French State will eventually acquire the remaining interest in ASN.
Why Did Nokia Sell ASN?
Nokia’s decision to divest ASN comes as part of its strategic focus on streamlining its portfolio and concentrating on growth opportunities in its core markets. The sale aligns with the company’s broader goals of active portfolio management, exemplified by its upcoming acquisition of Infinera. This divestment highlights Nokia’s efforts to enhance its operational efficiency and invest in high-growth sectors such as optical and IP networks.
Impact on Nokia’s Financials
The sale of ASN is expected to reduce Nokia’s net sales by approximately €1 billion ($1 billion). However, the divestment will also provide a boost to the company’s operating profit margin, with an increase of 100 to 150 basis points anticipated. This transaction reflects Nokia’s ongoing efforts to improve profitability by exiting non-core operations.
The Strategic Role of ASN
ASN has a long history, tracing its origins back to the late 1800s, and has become a major player in the subsea cable industry. Since Nokia acquired Alcatel-Lucent in 2015, ASN has installed more than 750,000 km of optical submarine cable across the globe. ASN’s cable ship fleet includes seven vessels managed by Louis-Dreyfus Armateurs, positioning it as a key entity in global subsea infrastructure.
Future Outlook for ASN under French Ownership
With the French State now holding ASN through the Agence des participations de l’Etat (APE), the company is expected to remain a strong player in the global market. The French government aims to preserve ASN as a vital French and European entity in the competitive subsea cable industry, ensuring its continued presence in a globally competitive market.
FAQ Section
1. Why did Nokia sell Alcatel Submarine Networks (ASN)?
Nokia sold ASN to focus on its core markets and high-growth sectors, particularly optical and IP networks. The divestment aligns with Nokia’s strategic goal of active portfolio management and optimizing profitability.
2. What is the value of the deal Nokia made with the French State?
The sale of ASN to the French State was valued at around €350 million ($363 million), with Nokia retaining a 20% stake in the business for the time being.
3. How will the sale of ASN impact Nokia’s financials?
While the sale will reduce Nokia’s net sales by approximately €1 billion, it is expected to increase the company’s operating profit margin by 100 to 150 basis points, improving its overall profitability.
4. What is ASN’s role in the subsea cable industry?
ASN has been a leader in subsea cable systems for over a century. With over 750,000 km of optical submarine cable installed globally, ASN continues to play a crucial role in connecting continents through reliable, high-capacity communication infrastructure.
5. What is the future of ASN under the French State?
Under the ownership of the French State, ASN is expected to strengthen its position as a key player in the subsea cable market, benefiting from long-term support aimed at maintaining its global competitiveness.
