Nokia Buys Comptel for $370 Million to Add Network Software

  • Network maker expanding beyond equipment to bolster sales
  • Purchase part of effort to build standalone software business

Nokia Oyj agreed to buy Comptel Oyj for 347 million euros ($370 million) to add technology that helps phone carriers manage their networks, part of a push into software and services as network-gear sales sputter.

Comptel shareholders will get 3.04 euros a share in cash, Espoo, Finland-based Nokia said in a statement Thursday. That’s 29 percent more than Comptel’s closing price on the Helsinki exchange Wednesday.

Nokia and rivals such as Ericsson AB of Sweden are trying to sell more services and software to wireless carriers to reduce reliance on cyclical network-equipment revenue. Phone companies in several key markets have largely completed their faster fourth-generation networks, putting pressure on infrastructure manufacturers such as Nokia to look for new customers and revenue streams.

“Operators today are trying to move from being traditional communications companies to digital-service providers,” Bhaskar Gorti, head of Nokia’s Applications & Analytics unit, said at a Helsinki media conference. “Nokia and Comptel strongly believe that we, together, can help our customers in their transformation.”

Shares of Comptel jumped 31 percent to 3.08 euros at 1:13 p.m. local time, above the offer price, while Nokia added 1.5 percent to 4.61 euros.

Nokia may get competition from other bidders, analysts at FIM said in a note. The premium is low and it’s possible shareholders don’t accept Nokia’s offer, the analysts said. Comptel’s board recommends the offer.

The acquisition gives Nokia programs to help process and analyze data traveling in carriers’ networks -- part of its plan to build a standalone software business, announced in 2015. The unit will focus on enterprise software and platforms for Internet-of-Things, and Nokia aims to make it as profitable as major companies in the field.

“This is interesting and something Nokia has achieved in the past,” UBS analysts including Gareth Jenkins said in a note. Expansion into new areas is “essential” for Nokia, they said.

Last week, Nokia reported a 13 percent decline in fourth-quarter revenue to 6.7 billion euros as equipment sales plummeted. Services sales at Nokia’s networks business were relatively stable at about 2.5 billion euros.

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