The green light means Nokia can get on with growing its data centre business in addition to getting more North American customers
The European Commission has unconditionally approved Nokia’s planned acquisition of Infinera, under the EU Merger Regulation, stating that the deal would not raise competition concerns in Europe. While the deal was expected to pass given there are several key competitors in the optical transport equipment space, it has come at a very different geopolitical time to when it was first announced last June – a European company taking over a US company used to raise zero eyebrows.
The grown-ups at the Commission found that Nokia and Infinera’s combined market shares in the global or EEA markets for the supply of optical transport equipment, as well as on the narrower segments of such markets, are moderate. It also found that there are several credible competitors on those markets that, following the transaction, will continue to exert sufficient competitive pressure upon Nokia. The deal makes Nokia the world’s second-largest provider of optical networking equipment after China’s Huawei, with around a 20 percent share, according to analyst figures.
On 18 February, Infinera announced it expected the Nokia deal to close “on or about 28 February”.
Data centre move
In June, Nokia announced it was acquiring Infinera for $2.3 billion with at least 70% of the consideration will be paid in cash and Infinera’s shareholders can elect to receive up to 30% of the aggregate consideration in the form of Nokia ADSs. The buy would bolster Nokia’s reshaped optical networks unit in its Network Infrastructure team – increasing it by 75%. Infinera is also vertically integrated. It has a semiconductor fab in Sunnyvale, with component packaging occurring in Allentown, Pennsylvania, in addition to a former Transmode facility in Stockholm.
As a result, the combined business will have significant in-house capabilities, including 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. In addition, Infinera has built a solid presence in the North America optical market, representing ~60% of its sales, which will improve Nokia’s optical scale in the region and complement Nokia’s strong positions in APAC, EMEA and Latin America.
Nokia, which has recently appointed Intel data centre executive Justin Hotard as its new CEO, has promised a Capital Markets day post-Infinera-close where it will outline it plans for growth in sectors outside telecoms and Infinera will help it bolster its data centre offerings. This is both within data centres and connecting them. Nokia is also active in NTT’s Innovative Optical and Wireless Network (IOWN) Global Forum including working on All-Photonics Network (APN) initiatives.
Most recently, NTT, Nokia, and Anritsu successfully demonstrated the dynamic rerouting of mobile fronthaul using IOWN All-Photonics Network (APN). Nokia supplied IOWN APN equipment such as Flexible Bridge, APN-T, APN-G, and APN-I, including its 1830 Time-sensitive Packet Switch (TPS) and 1830 Photonic Service Switch (PSS).
