Nokia, Huaxin Form New Joint Venture: Nokia Shanghai Bell

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It looks like China is finally going to get on board with the Nokia and Alcatel-Lucent merger.

Nokia and China Huaxin Post & Telecommunication Economy Development Center announced on Friday that they have agreed to a memorandum of understanding to combine Nokia’s telecommunications businesses in China and already existing firm Alcatel-Lucent Shanghai Bell into a new joint venture. As a part of the agreement, Nokia will hold a stake of 50% plus one share in the new joint venture, with China Huaxin owning the remainder of the shares. Of note, the statement from the companies highlights that fair value compensation will be received for assets contributed by both firms to the joint venture.

Keep in mind that this new joint venture is conditional on the closing of Nokia’s planned merger with Alcatel-Lucent (projected for 1H 2016). When that merger is complete, Nokia will own 50% plus one share of the new ASB.

Telecom industry analysts point out that China is the only major nation that has not already approved Nokia’s 15.6 billion euro ($17.6 billion) merger with Alcatel Lucent.

Statements from Nokia and Huaxin on joint venture

The new firm will be registered in the China Pilot Free Trade Zone. The new joint venture will have a single board of directors and management team, as well as unified customer and business functions and an integrated product portfolio and R&D platform.

Rajeev Suri, President and CEO of Nokia Corporation, noted: “Today’s agreement demonstrates Nokia’s deep commitment to China. Together with China Huaxin, Nokia will be in an excellent position to support strategic initiatives of the Chinese government such as “Internet Plus” and provide a strong link between Europe and China. We look forward to joining with China Huaxin and ASB to drive innovation for customers in China and to help accelerate the country’s shift to an innovation-driven economy. With this MoU now in place, we will also work closely with our new partners to make the case for swift approval of the proposed combination between Nokia and Alcatel-Lucent by the appropriate Chinese authorities.”

Yuan Xin, Chairman, China Huaxin, commented: “We are pleased to have signed this agreement with Nokia, and firmly believe the proposed combination would reinforce our companies’ presence in China. By bringing these two entities together, the new company would possess greater capacity for innovation and outstanding R&D capabilities, delivering benefits to our customers and shareholders alike.”

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