Will Samsung take over Nokia’s mobile network assets?

Samsung Electronics Co., the world’s top smartphone maker, showed initial interest in the mobile networks business of Nokia Oyj, a global telecom equipment giant, a media reported, as industry sources said the South Korean tech behemoth may seek the assets to become the world’s second-largest player in the sector.

Bloomberg on Aug. 29 reported Nokia’s mobile network assets are drawing preliminary interest from suitors including Samsung amid increasing pressure to find new growth in the troubled telecom equipment sector. The entire unit could be valued at roughly $10 billion, the US media quoted people with knowledge of the matter as saying.

The Finnish company has considered several different scenarios, from selling some or all of the division, to spinning it off or combining with a rival, according to the report.

“Samsung has expressed initial interest in acquiring some Nokia assets as it seeks to gain scale in the radio access networks that connect mobile phones to telecom infrastructure, the people said,” Bloomberg said. “ Any potential divestments could also attract interest from other rivals, the people said.”

The report came as Nokia has been struggling in competition against Chinese rivals such as Huawei Technologies Co. Its second-quarter operating profit dropped 32% due to weak demand for 5G telecom equipment.

NOKIA DENIES

Nokia denied the report, saying the company is committed to the success of its mobile network business, a highly strategic asset for both itself and its customers.

“Nokia has nothing to announce in relation to the speculations published in an article today, and no related insider project exists,” the company said in a stock exchange release.

Nokia, once the world’s No. 1 mobile phone maker, expanded the mobile networks business through acquisitions of assets from Siemens AG, Motorola Inc. and Panasonic Holding Corp. to seek a new growth driver after selling the cell phone business to Microsoft Corp. in 2013.

The Finnish multinational firm also suffered as European telecommunication service providers postponed network upgrades. Its operating profit skidded 27% to 1.6 billion euros ($1.8 billion) in 2023 as it failed to win a deal from AT&T Inc., the world’s third-largest telecommunications company by revenue.

SAMSUNG MAY NEED NOKIA’S ASSETS

Samsung’s headquarters has yet to take an official stance on the report, while Bloomberg said a company representative declined to comment.

The world’s No. 1 memory chip and TV maker may have been interested in Nokia’s assets to foster the wireless network business for its future technologies such as artificial intelligence and autonomous driving, industry sources in Seoul said.

Samsung has been developing 6G telecommunication technology for commercialization in 2030.

Samsung’s network business generated sales of 3.8 trillion won ($2.8 billion) last year, making up only 1.5% of the company’s total revenue.

The firm accounted for a mere 2% of the global network market, far behind the market leader Huawei with 30%, Nokia with 15%, Ericsson with 13% and ZTE Corp. with 11%. Samsung is expected to expand its market share to 17% by taking over Nokia’s mobile network assets.

The global telecom equipment industry was forecast to grow 42.3% to $1.1 trillion by 2030 from an estimated $762.4 billion, industry sources said.

Write to Eui-Myung Park at uimyung@hankyung.com
 
Jongwoo Cheon edited thi article.