HELSINKI—Finnish wireless-equipment specialist Nokia Corp. on Wednesday commenced its share-exchange offer for Alcatel-Lucent SA shareholders in Paris and New York, betting its â,¬15.6 billion ($16.6 billion) acquisition will allow the new company to better compete in a global race for scale in the business of making telecommunications and Internet gear.

Nokia's attempt to create a one-stop shop for telecom companies and Internet service providers comes as the company faces heightened competition from new players such as China's Huawei Technologies Co. Longtime Nordic rival Ericsson AB of Sweden, meanwhile, announced earlier this month it was forging an alliance with Cisco Systems Inc., to create another broad ensemble in many of the same businesses.

Nokia Chief Executive Rajeev Suri, in an interview, said the Ericsson-Cisco tie-up—short of the full-blown merger upon which Nokia and France's Alcatel-Lucent are embarking—was a sign that his move was the right one to take.

"That announcement is a validation of our strategy," he said.

Like Ericsson, Nokia has been under pressure to diversify its revenue stream beyond its core customers, largely telecom operators, and toward big companies outside that sector, like airlines, oil companies and car makers, as well as police and emergency services—all of which are looking for new hardware and software to do everything from better connecting their operations to enabling real-time emergency response.

After falling behind and ultimately surrendering in the smartphone arms race, Nokia spent recent years slashing costs and selling off assets, including its once legendary mobile-phone business, to specialize in wireless networks.

Now, it is widening its portfolio again, adding Alcatel-Lucent's stable of products, such as routers and switchers that are used to create networks.

Mr. Suri, whom Nokia elevated to the top job after selling its phone business to Microsoft Corp. in 2014, said the Nokia "wireless only" strategy was a temporary plan aimed at repairing a company that was saddled with many uncompetitive businesses.

"We had a lot of businesses which were massively subscale," he said.

Nokia's all-share bid Wednesday for Alcatel-Lucent has been cleared by antitrust authorities. If enough Alcatel-Lucent shareholders tender their shares, the deal will be contingent only on Nokia shareholders approving it, both of which is expected.

The Nokia-Alcatel-Lucent deal and the Ericsson-Cisco pact come as these and other network providers struggle to stay strategically relevant in a world where fixed-line telecom networks, mobile networks and cable are converging, and where telecom operators are consolidating.

"This market is converging rapidly, much faster than you think, and in order to serve operators that are becoming more and more converged, you need to have a portfolio that is end-to-end," Mr. Suri said.

Previous mergers in the networks business have stumbled, including the merger that created Alcatel-Lucent in the first place, in 2006, and the joint venture between Nokia and Siemens AG that created Nokia Siemens Networks in 2007. Mr. Suri ascribed that to poor timing.

"When those deals came, the road maps [for so-called 4G, the latest wireless-network technology] were already on the way—they were too late," he said. In contrast, Mr. Suri said, the big deals being made this year are timely: A big chunk of investments for the next generation of networks, known as 5G, will come next year.

5G is expected to drive what is known as the Internet of Things and a host of other services that 4G will be unable to do, due to its latency limits and significantly higher demands for real-time data transfer.

"We will be able to have one converged 5G offering rather than each of us building our own 5G network and then having to align them if we consolidated in two years," Mr. Suri said of Nokia and Alcatel-Lucent. "We are just ahead of the curve."

Write to Jens Hansegard at jens.hansegard@wsj.com

 

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(END) Dow Jones Newswires

November 18, 2015 07:15 ET (12:15 GMT)

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