Nokia upbeat on Alcatel buy as it boosts 5G

Nokia is optimistic on its buying of Alcatel-Lucent as the acquisition will enhance greater scope for 5G mobile equipment in addition to reduction in costs. The acquisition will see convergence of research knowledge of Alcatel-Lucent and Nokia.

The Finnish company is banking on 5G technology as it'll take care of the future demand for data requirements for cars and industry. Nokia has made a $16.6-billion offer for Alcatel-Lucent. The acquisition deal is expected to close in early 2016.

In a Reuters interview with Rajeev Suri, chief executive officer of Nokia, the Finnish company is in an advanced stage of completing acquisition process to take over Alcatel. The acquisition value is pegged at euro 15.6 billion ($16.62 billion).

French-American company Alcatel-Lucent is investing euro 4.7 billion on research and development (R&D) and Nokia's spending is over euro2 million.

"We have more scale to invest in 5G than we would alone. The deal coincides with a major new industry investment cycle set to kick off next year to develop the next generation of 5G networks that are expected to start going mainstream around 2020", Suri said.

Nokia has begun share-exchange offer for Alcatel-Lucent shareholders in Paris and New York. Nokia announced its plan to acquire Alcatel in April 2015 and hopes to close the deal by early 2016. Nokia hopes to create a one-stop shop for telecom and internet service providers.

Nokia is facing stiff competition in the market and under pressure to enhance revenues, the Wall Street Journal reported.

Nokia finds it difficult to generate more revenues beyond core customers mostly telecom operators. Nokia is upbeat on business prospects that after the acquisition, it'll be able to address the business requirements from airlines, oil and gas, automobile, police and other emergency service sectors.

Responding to Ericsson's plan to acquire Cisco, Suri said it's a right step and further validates Nokia's decision. Nokia is strong in wireless networking and Alcatel-Lucent has expertise in routing, switching and IP networks.

Nokia has received the necessary approvals from antitrust regulatory body and government. Nokia is a step away from the acquisition. If more than half of the shareholders of Alcatel-Lucent accept the deal, then Nokia will close the acquisition process. Suri expects that the deal may close after the first week of 2016.

Few shareholders in Alcatel-Lucent and Odey Asset Management, second largest stake holder, have sought for better terms after the quarterly numbers were better than Nokia's results.

The current 4G networks take care of mostly mobile devices and computer traffic only. The 5G technology will address projected data demands of connected vehicles, industry, and wearable communication devices.