Rajeev Suri is unequivocal: Alcatel-Lucent is going to have to fit in with his and his company’s way of doing things if the €15.6 billion merger is going to work.
The deal, announced in April, sees the Finland-based vendor take over its French rival in an all-share deal. It is currently jumping through various regulatory hoops with a view to closing sometime in the first half of 2016.
While the first day of Nokia Corporation, as the new company will be known, remains on the horizon, Suri is keen to set his stall out early. For some A-L lifers, it might make for uncomfortable reading.
“We don’t want to find the best of both companies,” the CEO tells European Communications. “It’s a takeover [so you have to] make your call early on regarding values, culture, product portfolio, integration.
“You can’t drag your feet on that because nobody is clear. It will be the Nokia corporate culture, headquarters and values...that’s what it is.”
He adds: “We have to do this in the first 100 days. Speed is key.”
It is a somewhat surprising tack from the softly spoken Suri. But he affirms: “I don’t like indecisive, consensus-based management.”
Although only appointed to the CEO role just over one year ago, Suri is celebrating his 20th anniversary at the company. As such, he has personal experience of a number of deals the firm has been involved in, notably the one which led to the formation and eventual breaking up of Nokia Siemens Networks.
It has clearly marked him. Says Suri: “In NSN one of the faults we made was to try and find the best of both cultures. You can’t do that.”
There are some differences between Nokia and A-L in terms of corporate culture, he goes on to say. When pushed, Suri describes Nokia as having a flatter and more approachable management structure.
But he rejects the notion that clashes will happen based on national company stereotypes. “We’re actually both a lot more global than people give us credit for. Our Finnish head count is around 7,000 out of roughly 60,000; A-L has around 5,000 French out of around 50,000 in total. It is a key similarity. Our management teams are very international.”
The CEO also provided an update on the status of Nokia’s Here mapping business, which various media outlets claim has attracted bidders including Uber and Facebook.
Suri admits the subsidiary has attracted “significant interest” but would not confirm who is in the running.
He does say that the quality of the bids is better than expected, but adds: “Let’s give it more time… We may not end up selling it if we don’t get the right value.”
This would appear to be more sales patter than a realistic strategy. Here is likely to be sold because it lacks synergies with the rest of the company.
To ram the point home, Suri says: “We’re doing [the strategic review] because the company will become much more networks focused. We’ve made that call.”
Here, which offers maps for 196 countries, voice guided navigation in 97 countries and live traffic information for 41 countries, saw revenues increase by 25 percent in the first three months of the year thanks to continued interest from automotive companies.
It is a considerable leap from the six percent increase in sales that the business managed in 2014 as a whole.
Suri admits things weren’t going to plan when he took over as CEO last summer.
“When I started, Here was doing too many things...the strategy needed a refresh, a more common sense approach to it. So we said we’re not going to be all things to all people.”
One of the first things he did was to change the leadership. Michael Halbherr, in post for just a few months, was replaced by former TomTom executive Sean Fernback.
“He’s done a good job of finding efficiencies and improving our competitiveness,” says Suri. “Here has had growth for three quarters in a row and profitability is up.”
It has all the hallmarks of fattening a pig for market.
But that may not have been the plan from the outset. When European Communications spoke to Nokia Networks’ VP of Corporate Strategy last November, a sale seemed to be far from her mind.
Kathrin Buvac indicated bringing Here and Networks together was a key goal and said it would be “foolish” not to leverage the relationships it has with car manufacturers.
Suri admits that there “might be” synergies between Here and Networks in the long term but it was “prudent” to do a strategic review now.
“On the big picture I think the synergies are limited. But that’s ok...sometimes you don’t have the synergies but you improve the portfolio, refresh the strategy and make it better,” he says.
So, the “might sell, might not sell” act is an act ahead of selling Here to the highest bidder? “Let’s see,” Suri says. “It has to be a good competitive deal for Nokia and our shareholders.”
There is much more clarity around another subsidiary, however.
Should the A-L deal get the go ahead from regulators, the France-based vendor’s submarine cable business will not be part of the new company.
“It may be spun off or divested or whatever and from our point of view we’re fine with that,” Suri confirms.
This is an extract from an in-depth interview that will appear in the Q2 issue of European Communications magazine. Click here to ensure you get your copy