Nokia's agreement to sell its HERE navigation business to a consortium of German car makers could prove a boon for the mobile industry, analysts at IHS Automotive said.
The Finnish company today confirmed it has agreed to sell HERE to a consortium comprising Audi, BMW and Daimler for an enterprise value of €2.8 billion ($3 billion) in a deal Nokia predicted will close in the first quarter of 2016. The company expects to receive €2.5 billion of the purchase price, after subtracting payments to the group of buyers to account for defined HERE liabilities, and said it will book a gain on the sale of around €1 billion.
IHS Automotive analysts Jeremy Carlson, Kevin Hamlin and Gerrit Schneemann said the deal will have a significant impact on the mobile industry.
In a research note emailed to FierceWireless:Europe, the analysts pointed out that HERE and rival TomTom are the only companies offering an alternative to Google and Apple in terms of supplying navigable maps on a global basis. "Mobile companies--many with consumer-facing mobile clients including Facebook, Amazon, Microsoft, Baidu and Samsung--see an independent mapping solution as critical in order to compete with Google for mobile advertising dollars," they wrote.
For the automotive industry, the German consortium's acquisition "poses an interesting opportunity of how an industry collective will share a strategic resource with competitors," the analysts noted.
Daimler CEO Dieter Zetsche recently told Reuters that the consortium would seek to make the HERE platform available to competitors. The IHS analysts said the most likely way the consortium would achieve that is to offer the platform to partners, who would be expected to pay an initial sign-up fee along with annual membership fees and contributions towards ongoing R&D costs including the collection and maintenance of high definition maps.
Companies that do not buy into the consortium "are expected to pay a normal licensing fee as they would today."
Nokia confirmed that the sale of HERE would leave it as a two-business company: Nokia Networks and Nokia Technologies, its technology licensing arm.
Discussion of who would own HERE patents moving forward was cited by Reuters as a key element in the planned deal, particularly technologies enabling autonomous vehicles to communicate with mobile networks to feed in, and receive, up to date traffic information.
Nokia president and CEO Rajeev Suri said the company will now focus on its planned combination with Alcatel-Lucent.
"Once that is complete, Nokia will be a renewed company, with a world-leading network technology and services business, as well as the licensing and innovation engine of Nokia Technologies," Suri said.
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