Ericsson bosses mull large-scale takeovers to defend against merged Nokia/Alcatel-Lucent

Ericsson CEO Hans Vestberg scheduled a meeting with senior management to discuss potential large-scale mergers and acquisitions that would help the company to compete against a merged Nokia and Alcatel-Lucent.

Vestberg will discuss large-scale deals as one potential solution to maintaining the company's leading position in the global infrastructure market in the event the Nokia Alcatel-Lucent deal goes ahead, Bloomberg reported, citing unnamed sources within Ericsson.

Any large-scale deal would represent a change in direction for Ericsson, which Bloomberg noted has erred towards smaller acquisitions that boosted the company's expertise in non-core sectors.

The company backed away from its own bid for Alcatel-Lucent in 2014 due to concerns the tie-up would not reap sufficient cuts in the companies' operating costs, the news agency added.

"I see no reason why we, given the right preconditions, would exclude a larger deal," Ericsson Chairman Leif Johansson told Bloomberg in an interview this month. "But as you know, there aren't that many left." An Ericsson spokesman declined to comment on the company's acquisition plans, according to Bloomberg.

A combined Nokia Alcatel-Lucent would eclipse Ericsson in terms of global sales, and hold an upper hand in the fixed line market, Bloomberg noted.

While Ericsson's choice of potential 'large-scale' acquisitions is narrow, Bernstein analyst Pierre Ferragu told Bloomberg that Juniper Networks or Ciena would make a good fit with the Sweden-based company.

However, Vestberg's management meeting may end up being moot: reports on Alcatel-Lucent's annual shareholder meeting revealed dissatisfaction with the proposed purchase price, casting doubt on whether the shareholders will accept the Nokia deal.

Regardless of whether Ericsson can find, and then implement, a large-scale takeover, the company is pressing ahead with other deals to shore up its global presence.

The company is currently negotiating a deal with Indian mobile broadband operator Reliance Jio regarding a mobile video partnership, as part of a broader plan to increase its share of the country's TV and mobile video market from 10 per cent today to 15 per cent in 2017, the Times of India reported.

Chris Houghton, head of Ericsson's Indian business, said the Reliance discussions cover the company's full range of mobile infrastructure, including LTE kit he said has the potential to boost smartphone sales in the country.

For more:
- see this Bloomberg article
- view this Times of India report

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