Nokia Corporation and China Huaxin Post & Telecommunication Economy Development Center have signed a memorandum of understanding (MoU) to have a joint venture that will combine Nokia's telecommunication and infrastructure business in China and China Xuaxin's Alcatel-Lucent Shanghai Bell, according to a press release issued by Nokia.
The joint venture, which will be called Nokia Shanghai Bell, is agreed upon following Nokia's proposed takeover of Alcatel-Lucent.
Under the MoU, Nokia will own 50 percent of the joint venture plus one share while China Huaxin will hold the rest, according to the press release.
A compensation that is fair in value will be received for the each company's contribution of relevant assets to the new joint venture.
NDTV Gadgets adds that the new joint venture could pave the way for Nokia getting an approval from China in the company's proposed takeover of Alcatel-Lucent.
Nokia announced last April that it will acquire Alcatel-Lucent for €15.6 billion, or about $17.44 billion.
NDTV Gadgets adds that China's approval is the last hurdle that Nokia needs to overcome to finalize its transaction to acquire Alcatel-Lucent.
Alcatel-Lucent and China Huaxin has a long-time joint venture.
"Today's agreement demonstrates Nokia's deep commitment to China," Rajeev Suri, president and CEO of Nokia, said in the press release. "Together with China Huaxin, Nokia will be in an excellent position to support strategic initiatives of the Chinese government such as "Internet Plus" and provide a strong link between Europe and China."
He adds in the press release that Nokia is looking forward to its partnership with China Huaxin and Alcatel-Lucent Shanghai Bell "to drive innovation for customers in China and to help accelerate the country's shift to an innovation-driven economy."
Yuan Xin, chairman of China Huaxin, said in the press release that they are pleased with the agreement with Nokia.
"By bringing these two entities together, the new company would possess a greater capacity for innovation and outstanding R&D capabilities, delivering benefits to our customers and shareholders alike," he said.
The new joint venture will be patterned to the one that Alcatel-Lucent has with China Huaxin.
The new joint venture is conditional upon the closing of Nokia's planned combination with Alcatel-Lucent, according to the press release.
Once Nokia's acquisition of Alcatel-Lucent is closed, the new joint venture will be formed.
