alcatel-lucent / nokia

Alcatel-Lucent / Nokia

Issues at stake

September 2015

IndustriALL – 09/11/2015 2

An ongoing consolidation within the telco market

Among NSPs: ! Al/ce/SGR/Virgin Mobile/Portugal

Telecom/Suddenlink ! Charter/Time Warner ! BT/EE

! AT&T/lusacell/Nextel/DirectTV ! Verizon/AOL

…and equipment providers: ! Infinera/Transmode ! Cisco/Tail-‐F

! Ciena/Cyan ! Amdocs/Ac/x ! Commscope/TE Connec/vity ! Arris/Pace ! Technicolor/Cisco devices


Major technological trends

n Mobility: ! LTE/LTE-‐A/5G ! GPON/G.Fast

n  Cloud and network virtualiza@on ! SDN/NFV

n  Big data

n  Internet of things/IoT


Differentiated growth?


Nokia and Alcatel-Lucent


Nokia’s motivations

New growth drivers and expanded portfolio

Critical size compared to competitors

Strengthened position in North America


13 178 12 733

25 911 25 054

23 514

4 408 5 645

10 053 9 058

10 399

-‐2 215 -‐2 436 -‐4 651 -‐3 990 -‐3 333

-‐1 621 -‐1 560 -‐3 181 -‐2 978 -‐3 873

572 1 632 2 204 1 853

2 791

137 170 307

-‐5 000

0

5 000

10 000

15 000

20 000

25 000

30 000

ALU NOKIA NOKIALU ERICSSON HUAWEI

M€

Sales Gross profit R&D SG&A Opera/ng profit Opera/ng profit IFRS

A combined company with similar results to Ericsson and Huawei ?

Sources: Annual Reports 2014 Nokia, Alcatel-‐Lucent, Ericsson & Huawei Huawei: sales from the Carrier Business segment, assessment for GM/OP/R&D/SG&A


2 982 3 887

6 869 6 053

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

ALU Nokia NOKIALU Ericsson

Europe

5 798

1 919

7 717

5 990

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000


North America

699 1 053 1 752 2 480

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000


CALA

1 068 1 100 2 168

4 912

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000


MEA and rest of the world

2 631

4 774

7 405

5 619

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000


APAC

The new Nokia will get stronger positions in APAC and North America

Sources: Annual Reports 2014 Nokia, ALU & Ericsson

ALU & NOKIA COMBINED SALES BY GEOGRAPHY AND COMPARED TO ERICSSON


Main players by technology: Nokia will be strong almost everywhere (Source Syndex, Dell’Oro, Infonetics)


The new Nokia, a major player in the telecom networks n  Nokia will become one of the main player in networks.

n  Stronger in the mobile networks ! It even could be the LTE leader.

n  A challenger for Cisco in IP Rou@ng ! With regular market share progress

n  A leader in DSL and number 3 in GPON

n  A strong player in Op@cs

è A major compe@tor with a telecom por]olio much broader than Ericsson and Cisco


Optics’ main players market share 2014

ALU is Nr 2 or 3 in Op@cs Huawei being the leader. Coriant – former NSN Op/cs assets -‐ was acquired by Marlin Equity, a private equity fund which also bought Sycamore and Tellabs. (source Infone/cs/Jefferies Research).


IP routers major players’ market share 2014

Cisco is the clear leader. ALU is Nr 3 (and 2 in the IP Edge). (Source Infonetics/Jefferies Research).


Fixed access major players’ market share 2014

ALU is the global leader in ADSL/VDSL. Huawei and ZTE are stronger in GPON.

Source: InfoneMcs, Mobile Infrastructure Equipment, Feb. 2015


Wireless: Nokia will be a real challenger to Ericsson and Huawei


2G/3G/LTE MARKET SHARES (RAN + CORE)

ERICSSON 30%

HUAWEI 20% NOKIA

17%

ZTE 11%

ALCATEL-‐LUCENT 10%

OTHERS 12%

ERICSSON 30%

NOKIALU 27%

HUAWEI 20%

ZTE 11%

OTHERS 12%


The sum of ALU & Nokia market shares shows that the new company could become the LTE leader… without any market shares losses in the forthcoming years…

A new leader in LTE?


LTE Market share (RAN + CORE)

ERICSSON 21%

HUAWEI 16%

NOKIA 19%

ZTE 12%

ALCATEL-‐LUCENT 15%

AUTRES 17%

NOKIALU 34%

ERICSSON 21%

HUAWEI 16%

ZTE 12%

AUTRES 17%


Services will grow faster than products


Services: a weakness for the new Nokia

n  The new Nokia will have a comprehensive por]olio. Much broader than Ericsson.

n  The new Nokia won’t be that strong in the Services area.

n  Both Nokia and ALU have heavily restructured their managed services contracts.

n  They don’t have a strong market share nor a broad por]olio in the OSS/BSS area. ! Even though it is considered as a high growth segment. ! That’s why Ericsson has realized several acquisi/ons so as to

n  diversify, n  take profit of a strong growth

n  as well as enlarge its addressable market.


Is Wireless peaking in 2015?


Compared analysis of products and solutions portfolios (Syndex vision) Hot issues regarding technological choices in Wireless: RAN, small cells, ePacket Core, IMS…


Synergies: Nokia announced 900 M€. It will be higher


Major issues at stake

n What will be the total amount of synergies?

n Where are the major headcount loca@ons? ! In and out of Europe.

n Where is located the R&D?

n Which are the European countries where both ALU and Nokia are strongly established?

n  How will the technological convergence be implemented (Wireless)?

n Will Nokia keep the whole ALU’s por]olio?

n  Comprehensive knowledge of the 2 groups: Business Units/Sales/OP…

alcatel-lucent / nokia

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