Nokia agrees to buy French telecommunications company Alcatel-Lucent for £11.2bn

Merger will create £29bn European equipment group

Nokia has announced it is buying French telecommunications rival Alcatel-Lucent in a deal worth £11.2bn (€15.6bn).

The deal will create a European telecommunications company worth around £29bn (€40bn).

While both telecoms equipment firms have struggled in recent years compared with earlier successes, Nokia clearly intends to put the combined entity back on the map.

"Together, Alcatel-Lucent and Nokia intend to lead in next-generation network technology and services, with the scope to create seamless connectivity for people and things wherever they are," said Rajeev Suri, president and CEO of Nokia in a statement released earlier today.

Suri said the combined company's "innovation capability will be extraordinary", bringing together Nokia's R&D with Alcatel-Lucent's "iconic" Bell Labs.

"We will continue to combine this strength with the highly efficient, lean operations needed to compete on a global scale," he said.

Michel Combes, CEO of Alcatel-Lucent, said the merger will "offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications".

Nokia said the deal will lead to general streamlining and a reduction of overheads in real estate.

Nokia and Alcatel-Lucent have both struggled in recent years so the merger is not surprising. Microsoft acquired Nokia's mobile phone arm in April 2014 and recently dropped the brand, which dominated the mobile phone business throughout the 1990s and early 2000s.