Is Nokia about to re-enter the mobile market with Alcatel-Lucent purchase?

At the beginning of the week rumours started to creep out that Nokia was interested in buying Alcatel-Lucent. The story started with a report on Bloomberg and - rather surprisingly for such rumours - Nokia decided to not only comment on the rumour, but confirm that it is true.

Details are still rather thin on the ground and there's no hint at a possible timescale for a buyout of the French telecoms firm. What the statement does do, however, is open up the interesting possibility that Nokia could be on the verge of re-entering the smartphone market after offloading the handset side of its business to Microsoft.

Alcatel-Lucent is known for producing, amongst other products and services, cheap handsets. Could this mean Nokia is considering taking a slice of the lucrative developing market pie? Bloomberg speculate that a potential buyout could be funded by the sale of Nokia's HERE mapping division - with Alcatel-Lucent valued at around $13 billion (£8.7 billion), Nokia would need to find almost twice the amount of money it received from Microsoft.

In a statement on the company's blog, Nokia said:

In relation to recent media speculation Nokia and Alcatel-Lucent confirm that they are in advanced discussions with respect to a potential full combination, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent. There can be no certainty at this stage that these discussions will result in any agreement or transaction.

Further details will be revealed in the coming days, but this is a buyout that has been talked about for many years now. The fact that "advanced discussions" are now underway is interesting, but we don’t yet know whether talked center around a full purchase, or just the wireless division in a bid to compete with the likes of Ericsson.

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