Telecoms OEM Nokia has sold its submarine cable unit to the French State.
Nokia today announces it has entered into a put option to sell Alcatel Submarine Networks (ASN) to the French State, represented by the Agence des Participations de l'Etat (APE).
The sale is expected to close at the end of 2024 or the beginning of 2025, subject to the usual closing conditions. The deal values ASN at €350 million ($374.2m).
Alain Biston, president and CEO of ASN, said: “This is an incredibly exciting moment for ASN as we undertake the next phase of our development. The French State’s ownership gives us a stable platform to further develop our vertically integrated technology offering. This, combined with Nokia’s retained stake, underscores all parties’ aligned interests in delivering a smooth transition for the benefit of our customers, suppliers, and other stakeholders.”
Nokia will initially retain a 20 percent stake in ASN with board representation ahead of a targeted exit, at which point the French State would acquire Nokia’s remaining interest.
“The proposed sale of ASN to the French State is the result of extensive discussions which concluded that the French State is the most relevant custodian of ASN,” Nokia said. “The French State, as a stable owner with a long-term interest in the operation and maintenance of critical infrastructure, ensures continuity for ASN customers, employees, and partners.”
Through several mergers and acquisitions, ASN can trace its roots back to the late 1800s. Nokia acquired the modern-day Alcatel-Lucent in 2015. To date, ASN has installed more than 750,000 km of optical submarine cable worldwide. Its cable ship fleet comprises seven vessels, managed by Louis-Dreyfus Armateurs.
The company said that under the ownership of the state’s holding agency APE, the French State will “secure the future of a strong French and European player in a globally competitive market.”
Bruno Le Maire, French Minister of Economy, said: “The French State, represented by the Agence des Participations de l’Etat (French shareholding Agency), is thrilled to announce its willingness to acquire 80 percent shareholding of ASN. The company is one of the world leaders in the submarine cable market, and the only company of its kind in Europe.”
Nokia said that by divesting the non-core subsea unit, the company can focus its Network Infrastructure portfolio “on growth opportunities in its core markets” and further improve the profitability of the group.
Going forward, Nokia’s Network Infrastructure Business Group will comprise three units: Fixed Networks, IP Networks and Optical Networks. The deal is expected to reduce the group's net sales by approximately €1 billion ($1bn) but will increase its operating profit margin by 100 to 150 basis points.
Pekka Lundmark, president and CEO of Nokia, said: “This is a good step forward in our strategy of actively managing our portfolio. ASN has been a standalone part of our Network Infrastructure business and through the divestment, Network Infrastructure will benefit from a streamlined portfolio with a focus on growth and strengthening its technology leadership. ASN has gone through a significant transformation in recent years and has a strong market position. I am pleased we have found a natural owner for the business. The French State will ensure continued investment in ASN and protection of critical industry know-how.”
BNP Paribas is serving as financial advisor to Nokia, Skadden is serving as legal counsel, and RELIANS (Pascal Dupeyrat, Jean-Christophe Martin) is serving as strategic and institutional advisor.
