Nokia sells its submarine cables for 350 million euros

Network devices manufacturer Nokia announces that it has signed an agreement to sell submarine cable systems to the French government. The value of the deal is 350 million euros.

Managing director Pekka Lundmark considers the transaction an important step forward, as Nokia is constantly striving to develop its product range.

“With the sale, the network infrastructure business group’s product portfolio will become clearer and it can focus on growth and strengthening technology leadership,” says Lundmark in the press release.

According to him, the French state is a suitable owner for submarine cables, as it ensures the continuation of investments and the protection of know-how in this “critical industry”.

The deal is subject to the approval of the authorities and French trade unions. Submarine cables do not have employees in Finland, but mainly in France.

The unit’s turnover last year was 1.1 billion euros and it employs 2,500 employees. A total of more than 800,000 kilometers of optical submarine cables manufactured by Nokia have been installed.

Nokia’s goal is to complete the transaction at the end of the year or at the latest at the beginning of next year.

Merenalaiset cable systems has been a separate business area at Nokia. As a result of the transaction, the company announces that it can focus on growth opportunities in the core markets of its network infrastructure business group and improve its profitability.

Because of the deal, Nokia estimates that the annual turnover of the network infrastructure business group will decrease by around one billion euros, but the operating profit percentage, which measures profitability, will increase by 1–1.5 percentage points.

Nokia will retain a 20 percent ownership stake in the submarine cables in the initial phase. After the agreed period, the French government redeems the remaining share of Nokia.

“The French government, represented by the Agence des Participations de l’Etat (state-owned company), is excited to announce its willingness to purchase 80 percent of ASN. The company is one of the world’s leading suppliers of submarine cables and the only European operator in its field,” says the French Minister of Finance Bruno Le Maire in the bulletin.

Nokian profitability has not recently developed as expected. That’s why it started a new savings program in the fall and has hinted that certain businesses might be sold.

The main reason for the difficulties of Nokia and its Swedish competitor Ericsson is the weakening of demand in the market. Many telecom operators have postponed their investments due to increased financing costs.