Nokia Corporation (NOK – Free Report) recently completed the divestiture of its submarine networks business, Alcatel Submarine Networks (“ASN”), to the French State. Announced in June 2024, the non-core asset sale aligns with Nokia’s ongoing strategy to enhance its financial position by focusing on core businesses and actively improving the profitability of its Network Infrastructure business group.
ASN, an industry leader with over 800,000 km of optical submarine systems globally, has grown significantly under Nokia’s ownership and is well-positioned to continue benefiting from the ongoing expansion of the subsea cables market. Acknowledging the ASN’s rich heritage and industry expertise, the Agence des Participations de l’Etat, representing the French State, has agreed to continue investing in and supporting sustainable development. This move is expected to offer a stable platform for ASN to broaden its technology offerings and capitalize on the growing demand in the subsea cable market.
This development will likely focus on and strengthen Nokia’s Network Infrastructure business, with its future built on three market-leading units: Fixed Networks, IP Networks and Optical Networks. As part of the deal completed on Dec. 31, 2024, Nokia will maintain a 20% stake in ASN and will have board representation to facilitate a smooth transition. The French State intends to acquire the company’s remaining shares in ASN once the transition is fully realized, consolidating full ownership of the company.
NOK’s Focus on Core Business Growth
Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include a seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and Internet of Things.
The company is witnessing healthy momentum in its focus areas of software and enterprise, which augurs well for the licensing business. It is poised to benefit from copper and fiber deployments of passive optical networking. It has been developing its 5G portfolio, strengthening AirScale and advancing the capabilities of its ReefShark chipset.
Nokia’s expertise in mission-critical networks is well-established, with deployments across more than 2,600 leading enterprise customers in the transportation, energy, manufacturing, webscale and public sector segments worldwide.
Will NOK Stock Benefit From the Divestiture?
The divestiture marks a big consolidation in the telecommunication industry, as companies aim to reorganize their portfolios and align with shifting market conditions and technical changes. The transaction is expected to bolster Nokia’s diverse portfolio of cutting-edge solutions and provide greater resilience to the company’s overall financial performance.
NOK Stock’s Price Performance
Shares of Nokia have gained 26.5% over the past year compared with the industry’s growth of 27.1%.
Image Source: Zacks Investment Research
NOK’s Zacks Rank and Stocks to Consider
Nokia currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader industry have been discussed below:
Ubiquiti Inc. (UI – Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth.
The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%.
InterDigital, Inc. (IDCC – Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%.
IDCC pioneered advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops various advanced technology solutions for digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.
Keysight Technologies, Inc. (KEYS – Free Report) sports a Zacks Rank of 1 at present. In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications and rising adoption of driver-assistance systems globally.
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