‘We believe now is the right time to take a compelling inorganic step,’ Nokia CEO and President Pekka Lundmark said in a statement.

Less than a year after a massive layoff round, Nokia looks to remake its telecommunications business with a pair of deals unveiled Thursday, including a $2 billion deal to buy Infinera and grow Nokia’s North America optical networking presence – while entering an agreement to sell Nokia’s Alcatel Submarine Networks (ASN) business to France for about $375 million (350 million euros).

Finland-based Nokia will pay for San Jose, Calif.-based Infinera with at least 70 percent cash and up to 30 percent stock, according to a statement Thursday. The deal should close during the first half of 2025.

“We believe now is the right time to take a compelling inorganic step to further expand Nokia’s scale in optical networks,” Nokia CEO and President Pekka Lundmark said in the statement. The combined businesses have a strong strategic fit given their highly complementary customer, geographic and technology profiles, the company said.

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Nokia To Buy Infinera

Nokia has a partner program, as does Infinera, with the latter appearing to invest in its partner program with a recent job postfor a channel sales director for strategic partners.

The deals come less than a year after Nokia revealed a plan to slash up to 14,000 jobs as the carrier attempts to make “strategic and operational” cost-cutting changes over the next couple of years. The vendor expected to save nearly $1.3 billion in costs by the end of 2026 and about $421.4 million in 2024 alone.

As part of the deal, Nokia will buy Infinera’s outstanding convertible notes for about $760 million – already factored in the $2.3 billion price tag. Both companies’ boards have unanimously approved the deal, but it is still subject to regulatory approvals.

Nokia’s stock traded at about $4 after market close Thursday, about flat. Infinera’s stock traded at about $6 after market close Thursday, up about 20 percent.

Infinera Deal Details

Infinera CEO David Heard said in the statement that “together we will have greater scale and deeper resources to set the pace of innovation and address rapidly changing customer needs at a time when optics are more important than ever – across telecom networks, inter-data center applications, and now inside the data center.”

Owning Infinera would also expand Nokia’s presence in webscale, “the fastest growing segment of the market,” according to the statement. About 30 percent of Infinera’s sales are in webscale, also called internet content providers (ICP).

The telecommunications giant puts targeted net comparable operating profit synergies at about $214 million (200 million euros) by 2027. These synergies come from supply chain efficiencies, portfolio optimization and reduced product engineering costs. However, Nokia expects a one-time integration cost of about $214 million for the acquisitions.

Nokia expects the acquisition to increase its optical networks business’ scale by 75 percent, according to the statement. The acquisition should accelerate the product roadmap timeline and breadth. The combined companies should gain an expanded digital signal processor (DSP) development team, expertise across silicon photonics and indium phosphide-based semiconductor material sciences, and deeper competency in photonic integrated circuit (PIC) technology.

Nokia and Infinera do not have a lot of customer overlap, according to the statement. About 60 percent of Infinera’s sales are in the North America optical market. Nokia already has strong positions in Asia, Europe, Latin America and the Middle East.

Alcatel Deal With France

Meanwhile, Nokia also announced Thursday that it entered a put option agreement with France to sell ASN in a deal slated to close at the end of 2024 or beginning of 2025. Nokia bought ASN as part of the $16.6 billion Alcatel-Lucent deal in 2016. The deal came not long after Microsoft bought Nokia’s mobile handset division for $7.2 billion.

Losing ASN will lower network infrastructure net sales by about $1.07 billion (1 billion euros), but ditching Alcatel should increase operating profit margin by at least 100 basis points. Nokia does not expect its financial outlook to change based on the divestiture.

Nokia has conducted the deal with France’s shareholdings agency, Agence des participations de l’Etat (APE), according to the statement. ASN has more than 466,000 miles (750,000 kilometers) of optical submarine cable deployed worldwide, enough to circumnavigate the globe 19 times.

As part of the deal, Nokia will keep 20 percent shareholding and board representation for a time “to ensure a smooth transition,” according to the statement. After the targeted exit, France will buy Nokia’s interest.

In the statement, Nokia CEO and President Pekka Lundmark said that divesting ASN will make Nokia’s network infrastructure business “a streamlined portfolio with a focus on growth and strengthening its technology leadership.”

“The French State will ensure continued investment in ASN and protection of critical industry know-how,” Lundmark said.

ASN President and CEO Alain Biston said in the statement that he expects France’s ownership to give “a stable platform to further develop our vertically integrated technology offering.”

And French Minister of Economy Bruno Le Maire said in the statement that the country “is thrilled” to buy ASN, calling it “one of the world leaders in the submarine cable market, and the only company of its kind in Europe.”

With the divestiture, Nokia’s network infrastructure business group will have three units – fixed networks, internet protocol networks and optical networks.