Nokia to close deal with Microsoft on Apr 25

Business

oi-Staff

By Super

Published: Tuesday, April 22, 2014, 9:42 [IST]

Finnish handset major Nokia on Monday said it expects the $7.2-billion deal with Microsoft for sale of its mobile devices and services business to conclude on April 25 and expressed the hope it would continue to operate the disputed Chennai plant under a service agreement.

"Nokia today announced that it expects the transaction whereby the company will sell substantially all of its devices & services business to Microsoft to close on April 25, 2014.

The transaction is now subject only to certain customary closing conditions," Nokia said in a statement. The future of Chennai plant, which employs 6,600 people and is entangled in tax disputes with Indian authorities, is uncertain. "With Chennai, it is worth remembering that we have said we will consider a services agreement with Microsoft should our Indian assets not be able to transfer at the close of the global deal," a Nokia spokesperson said.

A Nokia official said the company is still exploring the option of operating the plant by getting into a services agreement, which would allow it to continue as a contract manufacturer for other companies. "The situation is a complicated one, and Nokia is continuing to weigh its options. As there is still time before the closing of the deal, we cannot speculate on possible outcomes at this point," the spokesperson added.

In March, the Tamil Nadu government had slammed a Rs 2,400-crore notice on Nokia, saying the company had been selling products from Chennai plant in domestic market instead of shipping overseas. On March 14, the Supreme Court ordered Nokia India to give Rs 3,500 crore as guarantee before it transfers the plant to Microsoft. Last September, Nokia had announced it would sell a substantial part of its devices and services (D&S) business, including assets in India, to Microsoft for $7.2 billion by March 2014.

The handset and other asset components under the deal will be handed over to Microsoft's Finnish entity Microsoft Mobile Oy. The company has often indicated that the transfer of the Chennai plant may be adversely impacted if the tax dispute remains unresolved.

According to Nokia India Employees Union Honorary President, A Soundararajan, the Chennai plant, which was producing about 1 million mobile handsets per day, witnessed a steep decline and production now stands at just 0.4 million handsets.

Recently, the company offered a voluntary retirement scheme to its employees in Chennai and about 700 trainees are learnt to have opted for it. The spokesperson declined to confirm the number. Meanwhile, employees at the Chennai plant have started boycotting canteen services from today in protest against the recently announced voluntary retirement scheme, which they allege is being forced on them.

PTI