The U.S. government is stepping up its intervention in private companies in an effort to remain competitive in the technology market,media reported. Among the options discussed by government officials are getting big U.S. technology companies such as Cisco to buy companies such as Ericsson or Nokia, according to people familiar with the matter. In response, the U.S. government has held intermittent discussions with technology giants, private equity firms and telecoms executives, including pushing big U.S. technology companies such as Cisco to buy Ericsson or Nokia, in an effort to meet challenges from global rivals such as Huawei, the people said.
In addition, U.S. policymakers discussed supporting Ericsson and Nokia through tax cuts and export bank financing, or supporting a private equity firm to buy Ericsson and Nokia. Other proposals include support for “open” network technology, making it easier for U.S. start-ups to develop new technologies for 5G devices.
Indeed, as early as February, William Barr, us attorney general, made an unusual suggestion that the US should consider taking a controlling stake in the telecoms equipment makers Ericsson and Nokia. Mr Barr said at the time that the US and its allies should consider taking a controlling stake in Nokia and Ericsson to better cope with competition from the next generation of 5G wireless technology.
Later, Cisco CEO Chuck Robbins publicly said the company would not buy Nokia and Ericsson. He said the construction of a 5G mobile network infrastructure was not in line with Cisco’s financial position or strategy.
Cisco has also said it is not interested in acquiring the low-margin businesses in response to the latest proposals from U.S. government officials, according to people familiar with the matter. Some analysts agree that these hypothetical merger scenarios have a very low chance of getting there.
“Cisco CEO Robbins discussed a potential deal to buy a full or partial stake in a European equipment company last year with Larry Kudlow, white house economic adviser, but the talks are more patriotism-driven than Cisco’s merger interests,” said a source familiar with the meeting. “
Analysts say Robbins has focused Cisco’s acquisition activity on the fast-growing SaaS (Software as a Service) and recurring revenue businesses. Ericsson and Nokia, by contrast, are struggling hardware businesses. This means that Even if Cisco attends the discussion, it is only a courtesy. To be sure, Robbins will continue to focus on providing high-growth market opportunities for partners and customers. Nokia and Ericsson have shown little interest in the proposal, the report said.
Huawei is currently the world’s largest distributor of telecommunications equipment. Huawei topped the list of global telecomequipment spending in 2019, according to dell’Oro Group, a market research firm. Huawei can offer high-quality equipment at a lower price, while U.S. suppliers can’t compete with Huawei.