Going nowhere slowly: Alcatel-Lucent-Nokia-Siemens-Networks

As rumours of a potential hookup of Alcatel-Lucent and Nokia Siemens Networks (themselves the struggling products of mergers) emerge, analyst group Ovum has wasted no time pooh-poohing the move.

“To now merge two companies that have yet to make their previous mergers work would be a step backwards for both parties," says Daryl Schoolar, Ovum Principal Analyst, Infrastructure.

"This is especially true for NSN which appears to be finally getting its post merger self in order. The challenges facing this rumoured merger would be immense."

The news has rather a material impact on New Zealand: Alcatel-Lucent is Telecom's main mobile network supplier, while Nokia Siemens provides its gear to get Vodafone NZ's network firing.

Of course, it’s not the first time a merger of the merged companies has been on the cards. Back in 2009, Reuters carried an article on the very topic.

In Schoolar's view, among the biggest challenges would be rationalising the two companies overlapping product portfolios in wireless infrastructure.

“This is no small task as wireless revenues accounted for approximately 24% of ALU revenues in 2012 (14.4 billion Euros) and at least 40% of NSN's revenues (13.8 billion Euros).”

Noting that the Alcatel Lucent merger struggled with portfolio rationalisation, Schoolar scathes on: “There is no reason to believe that an ALU NSN merger wouldn't have the same problem.

ALU and NSN would also need to rationalise overlapping operator support services as well. All this rationalisation of course leads to more layoffs, something that both companies are very familiar with lately, and can be a major distraction.

But, mergers as a whole can be distractions and that is something neither of these companies can afford at this time.”

It’s not known whether or not the emergent company would be in a position to afford extra-long business cards on which to print ‘Alcatel-Lucent-Nokia-Siemens-Networks’, either.