Nokia Oyj (ADR) (NYSE:NOK) has signed a definitive agreement with China Huaxin for a joint venture between the company’s business in China and Shanghai Bell which is part of Alcatel Lucent SA (ADR) (NYSE:ALU).
The resulting joint venture to be born out of the definitive agreement between Nokia and China Huaxin will exist under the brand name Nokia Shanghai Bell. The announcement partly revealed some of Nokia’s plans for its future in the Chinese market. The joint venture will be the communication equipment maker’s exclusive platform for the continued development of tech in China.
Nokia will use the platform to focus on its strong points
Nokia will mainly focus on various areas including next generation 5G, optical and IP routing. Alcatel-Lucent Shanghai Bell will also continue to seek out opportunities in some overseas markets. The joint venture will somehow not be a new thing because ASB and Nokia’s Chinese business have been working together as one entity since the start of last year. However, they were operating under an interim operational agreement.
“Today’s agreement is historic for Nokia and for China, marking the next step of our decades-long commitment to the country and underscoring China’s leading role in developing next-generation communication technologies,” stated Nokia CEO, Rajeev Suri.
The new agreement is expect to officially solidify their join operations and the formalities are expected to close in July this year. This is because the deal has to satisfy various legal, regulatory and customary administrative conditions and any other conditions that it may be subjected to. The joint venture agreement will give Nokia more than 50% of NSB while China Huaxin will own the remaining stake. The two firms will also appoint a board of directors and a management team.
Suri also added that the joint venture between the two companies would create more room for innovation and also allow Nokia to strengthen its relationship with service providers. China Huaxin’s general manager Yuan Xin stated that there is confidence in the joint venture’s ability to successfully steer development and transformation through new technologies.
Nokia stock closed the latest trading session on Thursday at $6.11.