Nokia CEO says Alcatel buy will increase its 5G firepower

Reuters: Nokia’s planned takeover of rival network gear maker Alcatel-Lucent will give it far greater scope to invest in new technologies like 5G mobile equipment while cutting costs, its chief executive said on Wednesday.

Rajeev Suri also told Reuters in an interview that the Finnish company was making rapid progress towards closing the acquisition, originally valued at 15.6 billion euro ($16.62 billion).

The deal coincides with a major new industry investment cycle set to kick off next year to develop the next generation of 5G networks that are expected to start going mainstream around 2020, Suri said.

The two companies, if combined, would have spent around 4.7 billion euros last year on research and development. Nokia spent less than half of what Alcatel Lucent did on R&D. “We have more scale to invest in 5G than we would had alone,” Suri said.

5G equipment will be needed to handle the projected data demands of connected cars and industry, while making cities more secure and enabling new wearable communications devices. Current 4G networks handle mostly phone and computer traffic.

“The next year is the key, this is why the timing of our acquisition is good,” Suri said. In the 4G era, the two separate companies had two different portfolios, but with the merger, it will be able to invest in and market a single 5G product line.