Will Samsung take over Nokia’s mobile network assets?

Samsung Electronics Co., the world’s top smartphone maker, has expressed interest in the mobile networks business of Nokia Oyj, a global telecom equipment giant, according to a media report. Industry sources say the South Korean tech giant may seek its assets to become the world’s No. 2 player in that sector.

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

The Finnish company is considering several scenarios, from selling some or all of the division, to spinning it off or merging 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 comes while Nokia struggles in competition against Chinese rivals such as Huawei Technologies Co. Its operating profit for the second quarter dropped 32% on-year amid 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 its mobile networks business through acquisitions of assets from Siemens AG, Motorola Inc. and Panasonic Holding Corp. to seek a new growth engine, after selling its cell phone business to Microsoft Corp. in 2013.

The Finnish multinational also suffered as European telecom service providers postponed network upgrades. Its operating profit slid 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 telecom company by revenue.

SAMSUNG MAY NEED NOKIA’S ASSETS

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

The world’s No. 1 memory chip and TV maker may be interested in Nokia’s assets to develop 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 telecommunications technology with an eye toward commercializing it by 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 company holds 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%. Should it take over Nokia’s mobile network assets, Samsung would expand its market share to about 17%.

The global telecom equipment industry was forecast to grow 42% 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.