& cplSiteName &

Just Like Ericsson, Nokia Flogs Majority Stake in Its Video Biz

Iain Morris

Nokia is to sell a majority stake in its video technology unit to Canadian investment firm Volaris, in effect following the divestment trend set earlier this year by close rival Ericsson.

The deal seems to cover Nokia Corp. (NYSE: NOK)'s entire video product portfolio, including its caching and streaming, origin and storage, and stream personalization technologies. It comes months after Ericsson AB (Nasdaq: ERIC) sold a 51% stake in its media solutions business to a private equity firm called One Equity Partners: that business has now been rebranded as MediaKind. (See Ericsson Rebadges Media Unit, Eyes Smart Cities, M&A.)

Like Ericsson, Nokia is not disclosing the the financial terms of the arrangement. But it has indicated that the majority of its IP video business employees will transfer to a new Volaris subsidiary carrying the Velocix brand, which Volaris plans to run as an independent unit within its communications and media portfolio.

The Finnish vendor says it will act as a channel partner for Velocix, selling and offering support for that company's video solutions.

The name Velocix will sound very familiar to many: It is the name of a deep packet inspection (DPI) and content delivery networking (CDN) specialist that was acquired by Alcatel-Lucent (now Nokia) in 2009 and which underpinned Nokia's video platform developments in recent years. (See AlcaLu Buys CDN Specialist Velocix and Sky Deploys Nokia's Velocix.)

Despite the divestment, Nokia has been emphasizing how important video continues to be for customers and has pointed out that it will continue to maintain its video integration business so that it can provide support to existing clients.

"Video plays a very important role in our customers' strategies, both as it relates to their services and the demands it places on their networks," said Basil Alwan, the head of Nokia's IP and optical networks business, in a statement on the deal. "Meanwhile, the technology behind video -- including user experience, content packaging and delivery -- continues to go through meaningful shifts. Our new partnership enables us to adapt and grow in this important period; together we can better navigate change while providing continuity for our customers."

Unlike Ericsson, Nokia has not traditionally broken out details of revenues from video products. Its entire IP and optical networks business delivered sales of about €1.3 billion ($1.5 billion) in the recent second quarter, about a quarter of total group sales. Nokia reported a sharp year-on-year decline in sales of IP routing products but impressive gains at the optical networks unit. Sales at its small software business grew 2% on a constant currency basis. (See Profits Crash at Nokia's Networks Biz.)

The sale of Ericsson's video assets in January was a much higher-profile deal and one the industry had anticipated after CEO Börje Ekholm said he would double down on the core networks business as part of a new strategy. (See Ericsson Stuck in Loss-Making Rut, Offloads Majority Stake in Media Unit.)

For all the latest news from the video sector, check out our dedicated video content channel here on Light Reading.

In July, Ericsson revealed that its media solutions business, in which it is retaining a minority stake, would be renamed MediaKind. Executives at a press event acknowledged that former acquisitions such as Tandberg TV and Mediaroom had not properly been integrated into the business and that staff numbers had been declining in the preceding year. (See Ericsson Rebadges Media Unit, Eyes Smart Cities, M&A.)

As Light Reading noted at the time, when media solutions was last included in Ericsson's detailed financial reporting, in the first quarter of 2017, it made 1.96 billion Swedish kroner ($220 million) in sales, down 20% year-on-year, and was losing nearly as much money as it was bringing in.

Ericsson and Nokia are not the only network equipment vendors that have been flogging video assets this year. In May, Cisco Systems Inc. (Nasdaq: CSCO) sold its Service Provider Video Software Solutions (SPVSS) business to a private equity firm called Permira.

SPVSS is effectively the NDS business that Cisco acquired for about $5 billion in 2012. As with Ericsson and Nokia, Cisco has not disclosed the financial terms of its latest deal, although press reports have suggested it is selling the business for much less than it originally paid. (See Cisco Dumps Video Software Biz, Ends NDS Era and Bye Bye Cisco Video Software, Hello Synamedia .)

Nokia expects to close its deal with Volaris in the fourth quarter of the current fiscal year.

— Iain Morris, International Editor, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Featured Video
Flash Poll
From The Founder
After almost two decades at Light Reading, it's time for a different optical adventure.
Upcoming Live Events
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 6, 2018, London, United Kingdom
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
March 12-14, 2019, Denver, Colorado
All Upcoming Live Events
Hot Topics
Apple: It's the End of the SIM as We Know It
Iain Morris, International Editor, 9/13/2018
MWCA Day 2 Recap: '5G' Rolls Out & We Roll On
Phil Harvey, US News Editor, 9/14/2018
The Mobile Network Is Becoming a Cloud Service
Phil Harvey, US News Editor, 9/18/2018
MWCA Day 1 Recap: 5G Is Here…?
Phil Harvey, US News Editor, 9/13/2018
So Long, & Good Luck With That
Steve Saunders, Founder, Light Reading, 9/14/2018
Animals with Phones
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Partner Perspectives - content from our sponsors
One Size Doesn't Fit All – Another Look at Automation for 5G
By Stawan Kadepurkar, Business Head & EVP, Hi-Tech, L&T Technology Services
Prepare Now for the 5G Monetization Opportunity
By Yathish Nagavalli, Chief Enterprise Architect, Huawei Software
Huawei Mobile Money: Improving Lives and Accelerating Economic Growth
By Ian Martin Ravenscroft, Vice President of BSS Solutions, Huawei
Dealer Agent Cloud – Empower Your Dealer & Agent to Excel
By Natalie Dorothy Scopelitis, Director of Digital Transformation, Huawei Software
All Partner Perspectives