Nokia concludes sale of Alcatel Submarine Networks to French State

Nokia has officially completed the sale of Alcatel Submarine Networks (ASN), its renowned submarine networks business, to the French State, represented by the Agence des Participations de l’État (APE). The transaction, finalised on 31 December 2024, reflects Nokia’s commitment to refining its strategic focus by streamlining its portfolio. Nokia retains a 20% stake in ASN, ensuring a seamless transition as the French State takes over full ownership in the future.

The divestment underscores Nokia’s active approach to portfolio management, one of the company’s six strategic pillars. With the sale of ASN, a non-core but profitable segment, Nokia is concentrating on strengthening its Network Infrastructure portfolio, targeting growth in key markets and enhancing profitability.

Why Did Nokia Sell Alcatel Submarine Networks?

The decision to sell ASN was rooted in Nokia’s long-term strategy to optimise its business operations. As a global leader in submarine communication networks, ASN operates as a standalone entity, distinct from Nokia’s core operations. While under Nokia’s ownership, ASN experienced significant growth, benefitting from the burgeoning demand for subsea cables driven by the expansion of global data and communication networks.

However, Nokia recognised that ASN’s specialised market would benefit from a dedicated owner with a long-term vision. The French State, through the APE, emerged as the most suitable custodian, given its vested interest in maintaining critical infrastructure and supporting sustainable development.

Pekka Lundmark, Nokia’s President and CEO, remarked that the sale aligns with the company’s strategy to streamline operations and focus on its core technologies. He expressed confidence that the French State would ensure continued investment in ASN, safeguarding its market leadership and critical expertise.

The Strategic Importance of Submarine Networks

Submarine communication networks are the backbone of global connectivity, carrying an estimated 95% of international internet traffic. ASN has been a pioneer in this field, offering turnkey systems that integrate advanced cable and system technologies.

Under Nokia’s stewardship, ASN expanded its market reach and strengthened its vertically integrated offerings, positioning itself to meet the growing demand for resilient and scalable subsea cable systems. With the transition to French State ownership, ASN’s strategic importance is set to increase further, ensuring Europe’s competitiveness in this vital industry.

The French Economy Minister, Bruno Le Maire, highlighted ASN’s unique position as Europe’s only major player in the submarine cable sector. He emphasised the government’s commitment to supporting ASN’s technological advancements and market expansion.

Nokia’s Focus on Core Markets

The sale of ASN represents a broader realignment of Nokia’s Network Infrastructure business group. By divesting non-core assets, Nokia aims to consolidate its focus on three primary segments: Fixed Networks, IP Networks, and Optical Networks.

This strategic shift is expected to reduce Nokia’s net sales in the Network Infrastructure segment by approximately €1 billion annually. However, the company projects a significant improvement in its operating profit margin, increasing by 100–150 basis points. The reorganisation will not impact Nokia’s previously stated financial outlook, as detailed in its Q1 2024 financial report.

The divestment complements Nokia’s planned acquisition of Infinera, a move that highlights its ambitions to solidify its leadership in high-growth areas of telecommunications technology. By focusing on core markets, Nokia is positioning itself to better navigate the competitive landscape and drive long-term profitability.

What’s Next for Alcatel Submarine Networks?

Under the ownership of the French State, ASN is set to enter a new phase of development. The APE has pledged to maintain investment in ASN’s vertically integrated technology offerings, ensuring the company remains at the forefront of submarine communication innovations.

ASN’s President and CEO, Alain Biston, expressed optimism about the transition, noting that the French State’s stable ownership would provide the foundation for sustainable growth. The partnership between Nokia and the French State during the transitional period reflects a shared commitment to ASN’s success, ensuring continuity for employees, customers, and stakeholders.

The transaction also secures ASN’s role as a critical infrastructure provider, supporting the increasing global demand for subsea cables. With its established leadership in the market and robust technological expertise, ASN is well-positioned to capitalise on future opportunities.

A Milestone in Nokia’s Strategic Evolution

The sale of Alcatel Submarine Networks marks a significant milestone in Nokia’s journey to refine its business portfolio. By divesting a non-core yet thriving business, Nokia is reinforcing its focus on areas where it can drive innovation and growth. Meanwhile, ASN’s transition to French State ownership ensures the preservation and advancement of its vital contributions to global connectivity.

This strategic move exemplifies Nokia’s proactive approach to aligning its operations with long-term goals, creating value for shareholders while ensuring the sustainability of critical industries.