Nokia is planning to sell off its undersea internet cable business unit to France.

The transaction is worth €350 million ($375 million) and will see France initially purchase an 80 percent stake in Alcatel Submarine Networks (ASN), with Nokia retaining a 20 percent stake initially to facilitate a smoother transition.

The sale is expected to be finalized by early 2025, at which point France will purchase the rest of Nokia’s stake in ASN.

That Nokia, a Finnish company, owns a submarine cable firm based in France is a consequence of the fate of former telecoms giant Alcatel-Lucent. The company was a merger of French telecom firm Alcatel and Lucent Technologies, which was formerly AT&T’s supplier Western Electric and the home of Bell Labs, the birthplace of the transistor. The two paired up in 2006 in the aftermath of the dot-com bubble bursting.

In 2016, Nokia acquired Alcatel-Lucent, including ASN and its claimed 800,000 kilometers of undersea cables, for €15.6 billion.

However, after just eight years of owning the business, Nokia says it’s time to sell as it’s a “non-core standalone business.” It claims that by ditching ASN, it can spend more on better growth opportunities with higher margins. Giving up its submarine cable unit will cost Nokia circa €1 billion in revenue a year, but will improve margins by 1 to 1.5 percent.

Nevertheless, Nokia reckons there is increasing demand for submarine internet cables. Clearly the Finnish tech giant has done the math and figured higher demand didn’t make ASN worth keeping. After all, undersea cable projects are expensive, as made evident by Google’s billion-dollar investment to build two new internet connections in the Pacific.

That’s not including potential damage to undersea internet cables, which has happened both in Europe during the Russo-Ukrainian war and in the Red Sea as a consequence of both the Yemeni civil war and Israel’s conflict with Hamas.

Nokia believes that having ASN operate under the French government’s aegis makes sense. Alcatel has long been a significant French brand, and Nokia trusts that the country will sustain ASN’s long-term operations. ®

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