If anyone were wondering how Nokia is prepared for an increasingly software-driven telco world, the company’s intention to buy Comptel should answer that, at least in part. Espoo, Finland-based Nokia is buying fellow Finnish company Comptel for $370 million, in part to beef up its software offerings, namely SDN and NFV.
The planned acquisition is part of Nokia's strategy to build a standalone software business at scale by expanding and strengthening its software portfolio and go-to-market capabilities with additional sales capacity and a strategic partner network. In a statement, Nokia said Comptel would bolster Nokia's software portfolio by adding critical solutions for catalog-driven service orchestration and fulfillment, intelligent data processing, customer engagement and agile service monetization.
“The combination of Nokia's Service Assurance portfolio and Comptel's Service Orchestration portfolio would enable a dynamic closed loop between service assurance and fulfillment that simplifies management of complex heterogeneous networks,” Nokia said in a press release. “When combined with Nokia's Cloudband and Nuage portfolios, Nokia would be able to provide customers with complete, end-to-end orchestration of complex Network Function Virtualization (NFV) and Software Defined Networking (SDN) deployments.”
Nokia’s offer for the company represents a premium of 28.8% versus the Feb. 8 closing price of the shares on Nasdaq Helsinki and the deal has yet to close, so someone else could sweep in and try to better the deal, but Nokia noted that several major shareholders have already agreed to sell their shares.
"Nokia is committed to building its software business and is backing its commitment with strategic investments,” said Bhaskar Gorti, president of Nokia's Applications & Analytics business group, in the release. “The timing of the Comptel purchase is important as our customers are changing the way they build and operate their networks. They are turning to software to provide more intelligence, automate more of their operations, and realize the efficiency gains that virtualization promises. We want to help them by offering one of the industry's broadest and most advanced portfolios. Comptel helps us do that."
Comptel, a longtime partner with Nokia, was founded in 1986 and employs more than 800 people in 32 countries. It processes 20% of the world's mobile usage data every day and orchestrates communications and digital services for more than 2 billion end users daily. The company's major sites are in Finland, Bulgaria, Malaysia, India, the United Kingdom and Norway.
Comptel CEO and President Juhani Hintikka said combining with Nokia means they will create “an agile and innovative player which can challenge current market leaders head-to-head,” noting that for the past five years Comptel has been working hard to sharpen its thought leadership and competitiveness by rebuilding the brand, product portfolio and culture.
Major operators around the world are moving to a SDN/NFV framework, with AT&T aggressively leading the pack in the U.S. IHS Markit estimates the global NFV market, which includes NFV hardware, software and services, will be worth $15.5 billion by 2020.
Nokia has been moving to expand its offerings as the market for wireless network gear wreaked havoc on traditional vendors like itself and rival Ericsson. Last week, Nokia CEO Rajeev Suri said the company started 2016 primarily focused on mobile networks but ended the year with a complete portfolio spanning mobile, fixed, routing, optical, standalone software and more.