nokia-here-2015

Maps will be more important for autonomous cars (Phote: Nokia)

Nokia is considering the sale of its mapping unit, HERE, following its announcement of plans to acquire Alcatel-Lucent.

The Finland-based telecommunications equipment maker said in a statement that it had "initiated a review of strategic options, including a potential divestment" of its HERE business.

HERE is the navigation, mapping and location intelligence business built on the Navteq mapping specialist that Nokia's acquired in 2007 for 8.1 billion dlrs. The Finnish company kept HERE as one of three core business areas after it sold its mobile phone operations to Microsoft in 2014 for 7.5 billion dlrs. Analysts estimate HERE could sell for as much as 5 billion dlrs.

Though Nokia said the review may not result in any transaction, it will be tempted to sell because there is likely to be strong buying interest from many different players. According to a Bloomberg report, Nokia has already discussed a possible sale with Uber, whose taxi operations relies heavily on location-based information.

"HERE is a mobility powerhouse that is bound to attract a lot of interesting buyers," Sarwant Singh, head of the automotive and transportation practice at market researchers Frost and Sullivan, wrote in an article for Forbes magazine. Singh said HERE is particularly attractive because several of the company's product lines operate in high-growth parts of the market. He cited vehicle automation and dynamic location content in particular.

Re/Code, a US-based technology news site, notes that Nokia is the remaining big independent company that sells global mapping services. Technology groups such as Microsoft, Yahoo and Amazon, which all use HERE maps, could be interested in an acquisition. Apple is another potential acquirer.

Singh also noted that a consortium of German premium car brands is interested in HERE, and traditional suppliers such as Continental, Bosch, Magna and Denso could be eyeing the maps specialist. And he said Asian players such as Samsung, Alibaba and other Chinese groups could be looking at HERE.

Maps are becoming ever more important for automakers as advanced driver assistance systems evolve. Currently, these technologies rely primarily on in-car sensors and radar systems, but they will need another, reliable source of information once autonomous driving is introduced.

Strategy Analytics analyst Roger Lanctot noted in a blog post that HERE maps are the preferred option for 80 pc of the dashboard navigation market. That's mostly because they are better and more reliable than freely available maps from providers such as Google.

Nokia's review of the HERE business, comes as the company prepares to merge with France's Alcatel-Lucent, forming a new group with combined annual revenue of 26 billion euros. The transaction is expected to close in the first half of 2016.