Nokia's Navteq acquisition faces detour
31 March 2008
Nokia's Navteq acquisition faces detour
The European Commission has extended its review of the acquisition of mapping firm Navteq by Finnish handset vendor Nokia.
Nokia announced plans to buy up the LBS firm late last year, for a total of $8.1bn, making it Nokia's largest acquisition to date.
The company said that the extension of the review process has no bearing on the ultimate outcome and is confident it will be allowed to proceed.
"We have engaged in an open and constructive dialogue with the Commission in order to find agreement on the acquisition of Navteq. We have listened to the Commission's concerns, and look forward to finding a common understanding that will enable the transaction to be closed," said Rick Simonson, executive vice president and CFO at Nokia. "Nokia remains strongly committed to this acquisition, which will play a key role in our internet services push."
Location based services have slow to mature in the cellular industry, although it is widely felt that the ability to pinpoint the position of mobile subscribers offers great potential for commercially viable and user friendly services. To date, the most movement has been centred on safety issues such as the 911 directive in the US that requires operators to be able to locate their customers to within certain distance parameters.
Nevertheless, acquisition fits with Nokia's new strategy as a competitor to Google rather than a straight handset vendor. Last summer, the company launched a new portal, Ovi, which drew on its August 2006 acquisition of digital music firm Loudeye.
Shortly after, the company bought mobile advertising specialist Enpocket for an undisclosed sum, an event which coincided with the launch of Google's Adsense for mobile service. Then more recently, the firm snapped up application framework developer Trolltech.
Nokia commands almost 40 per cent of the handset market but evidently believes that, at least in part, its future success rests on securing a share of the services market. At the launch of Ovi, Nokia chief executive, Olli Pekka Kallasvuo, announced: "Devices alone are not enough anymore."
The Commission now has 90 working days to make a final decision on the transaction.
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