Nokia and Alcatel-Lucent: the French connection

Just a day after announcing they were in "advanced discussions with respect to a potential full combination," Nokia and Alcatel-Lucent on Wednesday revealed full details of their plans to combine under the Nokia brand, with headquarters in Finland, a strong presence in France and Nokia boss Rajeev Suri as CEO.

In view of the French government's previous reaction to Alcatel-Lucent's efforts to transform its business under the Shift Plan, it was not surprising to read yesterday that Suri and the CEO of Alcatel-Lucent, Michel Combes, have already met with France's President Francois Holland and Minister of Economy Emmanuel Macron to gain support for their proposed deal.

As part of the Shift Plan, Alcatel Lucent planned to cut 10,000 jobs worldwide including 900 in France. The company was eventually forced to back down somewhat, instead cutting fewer than 700 posts in France. If you remember, Bouygues Telecom also faced considerable resistance to its plans to cut 17 per cent of its workforce as part of a broader transformation plan to help it survive in a market with four mobile players.

Reports on Tuesday noted that Macron welcomed the deal between Nokia and Alcatel-Lucent, and said he has received commitments from Nokia that no jobs would be lost in France. According to Le Monde, Macron added that a combination of the companies would create a "European champion".

Nokia has now said that it "intends to maintain employment in France that is consistent with Alcatel-Lucent's end-2015 Shift Plan commitments, with a particular focus on the key sites of Villarceaux (Essonne) and Lannion (Côtes d'Armor). In addition, the company expects to expand R&D employment with the addition of several hundred new positions targeting recent graduates with skills in future-oriented technologies, including 5G."

So far, so good, as far as French interests are concerned.

Should the proposed deal ultimately prove to involve job cuts in France, Nokia would certainly have a fight on its hands. The French government remains under pressure over the high level of unemployment in the country, and has even previously threatened to use new rules to block job cuts.

For now, France is keeping a watching brief on Nokia and Alcatel-Lucent until the deal is completed. According to the French press, the government will remain vigilant on preserving jobs at production sites in France. However, Le Monde noted on Tuesday that Alcatel-Lucent employees and unions still fear that there will be redundancies, despite the assurances.

The unions also say they regret the fact that a national asset is to be ceded to a Finnish company. Following the sale of its devices unit to Microsoft, Nokia certainly knows how difficult that can be.-Anne