The FINANCIAL — Nokia on October 7 announced the planned leadership and organizational structure that it intends to implement after and subject to the successful closing of the public exchange offer for Alcatel-Lucent securities announced on April 15, 2015.
With this transaction, Nokia expects to create an innovation leader in next generation technology and services for an IP connected world, and to position the combined company to create the foundation of seamless connectivity for people and things wherever they are, according to Nokia.
“We are making very good progress on being ready to operate as a combined company when the proposed exchange offer closes,” said Rajeev Suri, President and Chief Executive Officer of Nokia. “After a thorough selection process, I am pleased to announce the company’s future organizational structure and exceptional leaders who will help chart the next steps in Nokia’s transformation.”
After the closing of the exchange offer, the Networks business would be conducted through four business groups: Mobile Networks, Fixed Networks, Applications & Analytics and IP/Optical Networks. These business groups would provide an end-to-end portfolio of products, software and services to enable the combined company to deliver the next generation of leading networks solutions and services to customers. Alongside these, Nokia Technologies would continue to operate as a separate business group. Each business group would have strategic, operational and financial responsibility for its portfolio and would be fully accountable for meeting its targets. The four Networks business groups would have a common Integration and Transformation Office to drive synergies and to lead integration activities. The business group leaders would report directly to Nokia’s President and Chief Executive Officer:
Mobile Networks (MN) would include Nokia’s and Alcatel-Lucent’s comprehensive Radio portfolios and most of their converged Core network portfolios including IMS/VoLTE and Subscriber Data Management, as well as the associated mobile networks-related Global Services business. This unit would also include Alcatel-Lucent’s Microwave business and all of the combined company’s end-to-end Managed Services business. Through the combination of these assets, Mobile Networks would provide leading end-to-end mobile networks solutions for existing and new platforms, as well as a full suite of professional services and product-attached services. The designated President of Mobile Networks would be Samih Elhage, who currently serves as Executive Vice President and Chief Financial and Operating Officer, Nokia Networks.
Fixed Networks (FN) would comprise the current Alcatel-Lucent Fixed Networks business, whose cutting-edge innovation and market position would be further supported through strong collaboration with the other business groups. This business group would provide copper and fiber access products and services to offer customers ultra-broadband end-to-end solutions to transform their networks, deploying fiber to the most economical point. The designated President of Fixed Networks would be Federico Guillén, who currently serves as President of Fixed Networks, Alcatel-Lucent.
Applications & Analytics (A&A) would combine the Software and Data Analytics-related operations of both companies. This comprehensive applications portfolio would include Customer Experience Management, OSS as distinct from network management such as service fulfilment and assurance, Policy and Charging, services, Cloud Stacks, management and orchestration, communication and collaboration, Security Solutions, network intelligence and analytics, device management and Internet of Things connectivity management platforms. CloudBand would also be housed in this business group, which would drive innovation to meet the needs of a convergent, Cloud-centric future. The designated President of Applications & Analytics would be Bhaskar Gorti, who currently serves as President of IP Platforms, Alcatel-Lucent.
IP/Optical Networks (ION) would combine the current Alcatel-Lucent IP Routing, Optical Transport and IP video businesses, as well as the software defined networking (SDN) start-up, Nuage, plus Nokia’s IP partner and Packet Core portfolio. IP/Optical Networks would continue to drive Alcatel-Lucent’s technology leadership, building large scale IP/Optical infrastructures for both service providers and, increasingly, web-scale and tech-centric enterprise customers. The designated President of IP/Optical Networks would be Basil Alwan, who currently serves as President of IP Routing and Transport, Alcatel-Lucent.
Nokia Technologies (TECH) would remain as a separate entity with a clear focus on licensing and the incubation of new technologies. Nokia Technologies would continue to have its own innovation, product development and go-to-market operations. Ramzi Haidamus would continue in his current role as President of Nokia Technologies.
Nokia expects to align its financial reporting under two key areas: Nokia Technologies and the Networks business. The Networks business would comprise the business groups of Mobile Networks, Fixed Networks, Applications & Analytics and IP/Optical Networks. Nokia also expects to provide selective financial data separately for each of the four Networks business groups to ensure transparency for investors over the performance of each of them. Nokia expects to announce further details of the new financial reporting structure after the closing of the exchange offer.
“Our goal is to position each business group for clear leadership in its particular market and to create a combined portfolio that provides the scope and scale our customers expect, underpinned by a strong focus on innovation, quality and superb execution,” explained Suri. “We aim for all our business groups to be innovation leaders, drawing on the combined company’s unparalleled R&D capabilities to deliver leading products and services for our customers, and ultimately ensure the company’s long-term value creation.”
The combined company is expected to have a common sales organization across the business groups, except for Nokia Technologies. In addition, effective after the closing of the exchange offer, there would be six additional unit leaders within the combined company, who would report directly to the President and CEO:
Timo Ihamuotila, currently Executive Vice President and Group Chief Financial Officer, Nokia, would serve as Chief Financial Officer (CFO). He would be responsible for all finance activities and would oversee effective and systematic performance management, external and internal reporting, and capital allocation processes. In addition, he would be responsible for investor relations, the execution of mergers & acquisitions and treasury.
Ashish Chowdhary, currently Chief Business Officer, Nokia Networks, would serve as Chief Customer Operations Officer (CCOO). He would lead the global Customer Operations organization, which would be responsible for customer interactions and sales across all business groups. Customer Operations would be organized by seven markets globally and act as the single interface for telecommunication and enterprise customers across all products and services. Customer Operations would drive strong business momentum across the business groups and deliver unparalleled customer service to position Nokia as the world’s leading telecom vendor.
Marc Rouanne, currently Executive Vice President, Mobile Broadband, Nokia Networks, would serve as Chief Innovation & Operating Officer (CIOO). He would have two primary roles: innovation and operations, and all activities impacting operative transversal functions would be housed in this unit. He would drive cutting-edge innovation at internet speed throughout Nokia, using the power of Bell Labs and FutureWorks to shape Nokia’s vision across the business groups. The CIOO would also drive the combined company’s digital agenda through IT and Cloud in order to create an agile and collaborative environment for the company’s world class engineers. He would manage quality, information security, manufacturing and supply chain operations, as well as units like real estate, data centers and laboratories. The CIOO would be responsible for global procurement, the end-to-end transformation and integration of the combined company, and would work with the CFO to drive performance management across the company.
Hans-Jürgen Bill, currently Executive Vice President, Human Resources, Nokia, would serve as Chief Human Resources Officer (CHRO). He would be responsible for leadership and talent development, recruitment and all human resources guidelines, as well as compensation and benefits policies for the company. Human Resources would play a crucial role in developing a diverse, international environment and entrepreneurial spirit within the combined company.
Kathrin Buvac, currently Vice President, Corporate Strategy, Nokia Networks, would serve as Chief Strategy Officer (CSO). She would be responsible for setting Nokia’s corporate strategy and long-term strategic direction, market and competitor intelligence, corporate development – including the prioritization of M&A targets across the company, in conjunction with the CFO – and strategic partnerships at group level. She would also steer and integrate the business group strategy and business development teams, as well as the CIOO innovation team, to ensure consistent execution of the company’s strategy. In line with our vision of the Programmable World, she would also oversee Nokia’s strategy for the Internet of Things.
Barry French, currently Chief Marketing Officer and Executive Vice President, Marketing and Corporate Affairs, Nokia, would serve as Chief Marketing Officer (CMO) and would oversee the Marketing & Corporate Affairs unit. The responsibilities of the unit would include regional and corporate marketing, internal and external communications, government relations, corporate social responsibility, employee health and safety, and custodianship and management of the Nokia brand. He would also set the overall direction for the business groups’ product marketing.
Maria Varsellona, currently Executive Vice President and Chief Legal Officer, Nokia, would serve as Chief Legal Officer (CLO). She would be responsible for overseeing and managing all legal, contracting, corporate governance, ethics and compliance matters across Nokia globally, as well as advising the President and CEO, Board of Directors and officers of the company in relation to such matters.
The proposed changes would only be implemented after the successful closing of the public exchange offer* and be subject to the completion of the relevant works council consultation procedures.
As announced yesterday, Alcatel-Lucent is to continue to operate its undersea cables business, Alcatel-Lucent Submarine Networks (ASN), as a wholly-owned subsidiary. Nokia expects to operate ASN as a separate entity.
As previously announced, Nokia has agreed to sell HERE, its mapping and location services business, to a consortium of leading German automotive companies. HERE will continue to operate as a business of Nokia until the sale is completed, but is not included in the planned future organizational structure of Nokia. The sale of HERE is expected to close in the first quarter of 2016, and Nokia plans to report HERE as a discontinued operation from the third quarter of 2015 onwards.