Nokia is to buy Alcatel-Lucent in an all-share deal that values its smaller French rival at 15.6 billion euros ($16.6 billion), building up its telecom equipment business to compete with market leader Ericsson.
Nokia's takeover of Alcatel-Lucent will redefine a telecom equipment sector suffering weak growth prospects and pressure from low-cost Chinese players Huawei and ZTE.
The combined company will have about 114,000 employees and combined sales of around 26 billion euros. In mobile equipment it will rank a strong second, with global market share of 35 percent, behind Sweden's Ericsson with 40 percent and ahead of Huawei's 20 percent, according to Bernstein Research.
The new Nokia will have stronger exposure to the important North American market, with key contracts with AT&T and Verizon.