Published on 21 Dec 2023 on Zacks via Yahoo Finance
Nokia (NOK) Divests Non-Core Assets to Optimize CNS Portfolio
Nokia Corporation NOK recently signed a definitive agreement with Lumine Group Inc. to divest its Device and Service Management business platform. The transaction is valued at 185 million euros with provision for additional 35 million euros based on the first year’s performance post deal closure. The deal is anticipated to be completed by the first quarter of 2024, subject to mandatory approvals and compliance with regulatory requirements.The strategic move aligns with the CNS (Cloud and Network Services) group’s strategy over the last two years that aims to achieve faster-than-market growth by establishing technology leadership in key areas. Nokia had sold its VitalQIP product and made Red Hat the main infrastructure platform for Nokia Core Network applications earlier this year.The Device Management (DM) portfolio provides support to Communication Service Providers for the remote management of home broadband access devices and IoT sensors from various vendors. The Service Management platform (SMP) focuses on enhancements in customer care services. Currently, Nokia’s coverage includes more than 1 billion devices and 150 deployments worldwide.The Device and Software Management platform businesses are consistent with Lumine's autonomous operating model. Lumine boasts solid telecom industry expertise with a robust balance sheet and market capitalization. Post-buyout, the DM and SMP businesses will function independently under the brand name Motive. The acquisition will significantly boost Lumine’s software portfolio offerings and will be in line with its strategy to invest in a long-term product roadmap. The agreement also accentuates Nokia’s strategic intent to optimize its CNS business portfolio. This involves driving investments toward strategic areas such as network as a code, Software as a Service (SaaS), private wireless and edge technologies and the development of the 5G core.Nokia is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. Its installed base of high-capacity AirScale products, which enables customers to upgrade to 5G quickly, is growing fast. It is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, it is transforming the way people and things communicate and connect.NOK aims to create new business and licensing opportunities in the consumer ecosystem. It facilitates customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation required to support dynamic operations, reduce complexity and improve efficiency. It seeks to expand its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets.The stock has declined 29.9% in the past year against the industry’s gain of 7.3%.
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