Nokia is on track to receive unconditional antitrust approval from the European Union for its proposed $2.3 billion acquisition of Infinera, a U.S.-based optical networking and semiconductor company, sources familiar with the matter revealed on Friday.
The European Commission, which oversees merger approvals in the EU, is set to complete its preliminary review by February 26. Insiders indicate that the deal is expected to clear regulatory hurdles without conditions, paving the way for Nokia to finalize the transaction within the first quarter of 2025.
Strategic Expansion in Optical Networking
The acquisition will strengthen Nokia’s position in the optical networking market, pushing its market share to 20%, second only to Huawei. The Finnish telecom giant had announced the deal in June 2024, citing its ambition to expand into optical networking technologies, which play a crucial role in modern telecommunications infrastructure.
With this deal, Nokia aims to enhance its offerings to big tech firms like Amazon, Alphabet (Google), and Microsoft, all of which are aggressively investing in data centers and AI-driven computing power.
“The demand for ultra-fast, low-latency networking solutions is surging, and integrating Infinera’s technology will enable us to deliver next-generation solutions for data centers and telecom networks,” a Nokia spokesperson said.
Competitive Landscape and Regulatory Scrutiny
Infinera is a key player in intra-data center communications, a sector that supports the growing need for server-to-server connectivity within AI-powered data centers. The company generates approximately 60% of its revenue from the United States and has a strong footprint in the optical transport network segment.
The EU’s review of the deal was closely watched, given concerns over competition in the networking hardware sector. However, sources indicate that Nokia’s acquisition will not significantly harm market competition, reducing the likelihood of regulatory intervention.
Nokia has previously stated that it expects to close the deal in Q1 2025, reiterating the timeline in its January 30 financial statement.
Market Impact and Future Outlook
The optical networking space is evolving rapidly as enterprises and cloud service providers seek higher bandwidth and faster data transmission. Nokia’s expansion into this domain aligns with its broader 5G and AI-driven networking strategy.
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The move comes amid an ongoing U.S.-China trade war that has limited Western companies’ access to the Chinese market. With Huawei maintaining a dominant presence in China, Nokia and other Western firms are focusing on the U.S. and European markets for growth.
Industry experts view this acquisition as a strategic boost for Nokia, allowing it to compete aggressively against Huawei and other networking giants.
If the EU Commission clears the deal as expected, Nokia will proceed with integrating Infinera’s operations, focusing on expanding optical networking solutions for cloud computing and AI workloads.
