Nokia is buying Alcatel-Lucent for $16.6 billion

Nokia, the telecom giant that sold its handset business to Microsoft in 2013, announced it will acquire telecom equipment maker Alcatel-Lucent for $16.6 billion.

The move was announced just a day after Nokia and Alcatel-Lucent confirmed they had entered acquisition talks. The deal will make Nokia the world’s top seller of telecom equipment and services, ahead of Ericsson, Huawei, and ZTE.

After dominating the mobile industry for a decade and a half, Nokia failed to rise to the challenge of the iPhone and Android, with an ill-judged bet on Windows Phone sealing its fate in the handset business. Nokia sold its handset assets to Microsoft, but the Finnish company kept its telecom equipment business, its Here maps unit, as well as a lucrative patent licensing business.

Alcatel-Lucent is a multinational corporation that formed in 2006 when France-based Alcatel merged with Lucent Technologies, a company that AT&T spun off in 1996. A major player in the telecom hardware industry, the Franco-American company owns the famed Bell Labs, a research subsidiary that employed eight Nobel Prize winners and developed major technologies including the transistor, laser, and the UNIX operating system.

In 2004, Alcatel-Lucent entered a joint venture with China’s TCL to produce cell phones under the Alcatel brand, but TCL has since taken over the venture, and today there’s no relationship between Alcatel-Lucent and the Alcatel OneTouch smartphones.

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Similarly, Nokia has “lent” its brand to Hon Hai Technology Group (Foxconn), which uses it to sell the Nokia N1 tablet; after the expiration of the non-compete agreement that Nokia currently has with Microsoft, Nokia-branded smartphones may be launched as well. With that said, Nokia’s contribution to such a device could be minimal and is entirely hypothetical.

To clarify again, Nokia buying Alcatel-Lucent does not affect the Alcatel OneTouch line and does not signify that Nokia is back in the smartphone game. But it does show that Nokia, even without its legendary phones, is far from dead and will remain a major force in technology for years to come.