Nokia, the Finnish telecoms equipment maker announced today, it will buy Comptel, another Finnish telecom company for a whopping price of 347 million Euros. This is because; Nokia knows how people are depending on software for making the network smart. Nokia, Ericsson as well as Huawei have suffered a lot these days, because more and more people are demanding 4G broadband. Very soon, the next generation 5G networks will come and these companies will be left behind.
Amidst all this, the traditional suppliers of hardware and accessories are facing big challenges because they aren’t able to virtualize products. Now, there is a race of delivering a good number of communication features.
Comptel beat its rivals Radcom, Convergys and Amdocs last year by developing software which helps operators in managing as well as controlling networks and services. This acquisition is planned by Nokia and the main strategy is building standalone software by strengthening as well as expanding the portfolio as per the capabilities of the market and strategic network.
Some contradictions to this deal
There was 1 analyst who was of the belief that this deal could prove as a threat to Nokia. Recently, a virtualization product was launched by Comptel through which network hardware equipment could be made; thus, rival bids can be attracted.
The network sales of Nokia could be weakened by Comptel, said an analyst Mika Metsala. He further added “This is becoming a software business. Like in many businesses, additional value will be created through software, not hardware.”
The share price will be 3.04 Euros, which means there would be a 29 percent premium. Metsala further added that there are several traditional software companies who have interest in such kinds of virtual networks; there are plenty of buyers.
Around 48 percent of Comptel’s shares are with its shareholders and the board of directors. Last year, Alcatel-Lucent, the Franco-American network was purchased by Nokia for 15.6 billion Euros. This was an all-share deal and was done mainly for broadening the portfolio of its products. Now, 1000s of jobs are being cut because the main motive is reducing costs. This month, Nokia reported that there is a 27% fall in the quarterly earnings. Moreover, there are expectations that the global network market’s value will fall by 2 percent this year. Let’s see how this partnership cracks up; what are your views? Do share in our comments section below.