FT.com / Companies / Telecoms - Nokia takes big step into mobile content

FT.com / Companies / Telecoms - Nokia takes big step into mobile content

Nokia takes big step into mobile content
By Robert Anderson in Stockholm and Paul Taylor in New York

Published: October 1 2007 19:44 | Last updated: October 1 2007 23:55

Nokia, the world’s largest mobile telephone manufacturer, is to take a giant step into the fast-growing mobile content and services market by acquiring Navteq, the leading provider of digital map information, for $8.1bn in cash.

Nokia, which is trying both to diversify away from handsets and offer customers more reasons to buy its handsets, will pay $78 in cash for each Navteq share, a 34 per cent premium to the price a month ago when takeover speculation started to push the shares higher.

The deal is the biggest in Nokia’s latest spending spree. In recent months, the Finnish handset maker has announced plans to acquire Loudeye, a digital music company, for $60m, Twango, a social networking community, for a reported $100m, and Enpocket, a mobile marketing company, for an undisclosed sum.

Analysts suggested the price was expensive, given that TomTom, the market leader in car navigation devices, recently agreed to pay €1.8bn ($2.6bn) for Tele Atlas, the number two in the digital map market.

However, they noted that Nokia might have been forced to raise its offer to outbid potential buyers, rumoured to have included both Google and Microsoft.

To justify the price, analysts suggested Nokia would have to work hard to ensure that Navteq retained its customer base.

Nokia believes location and content services will be key in future mobile services, allowing users to find restaurants and locate friends nearby in real time, while providing opportunities for targeted advertising.

US-based Navteq, which was founded 22 years ago and is headed by chief executive Judson Green, has 3,000 employees and reported revenues of $582m last year, creates the digital maps and content that power GPS navigation and location-based devices in cars, on websites, mobile phones, and for governments and businesses.

Nokia will finance half the acquisition, expected to be completed next year, from its €8.3bn cash pile and half from loans.

Nokia’s shares on Monday closed down €1.54 at €26.23.
Copyright The Financial Times Limited 2007