The merger of French network equipment giant Alcatel and its US-based rival Lucent Technologies could compel other firms to look for more acquisitions, analysts, quoted by an Associated Press report, said.
According to the report, analysts said Nokia and Ericsson would need to grow by acquisition to counter the long-term impact of the Alcatel-Lucent merger on their businesses.
Although neither was threatened in its core business by the link-up between the French and US heavyweights, Nokia would need to move to protect its networks business, and Ericsson its fixed-line activities, the report said.
Reports said Alcatel and Lucent earlier agreed to form a global giant worth about $33 billion.
"Nokia Networks will be smaller than this new entity," Nordea analyst Karri Rinta, quoted by the report, said. "They will have to at least acknowledge the fact that organic growth won't be enough and that there is a need for acquisitions to strengthen product portfolio and market share."
Like Nokia, Ericsson need not fear for its core business following the Alcatel-Lucent merger. But Ericsson's vulnerable spot would be its fixed-line business, where the new French-US entity would be strong, analysts said.