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Nokia confirms it's in 'advanced' talks to buy Alcatel-Lucent

Following speculation regarding a deal, Finnish telecoms giant Nokia admits it's in discussions with its French rival, but warns that nothing is certain yet.

Nokia is in talks to snap up Alcatel-Lucent, a fellow telecoms company. SARI GUSTAFSSON/AFP/Getty Images

Nokia has confirmed it's talking to French company Alcatel-Lucent about a possible buyout.

"In relation to recent media speculation, Nokia and Alcatel-Lucent confirm that they are in advanced discussions with respect to a potential full combination," the companies said in a joint statement, following a report from Bloomberg that claimed a deal was in the works.

Nokia added that an agreement "would take the form of a public exchange offer by Nokia for Alcatel-Lucent," but noted, "There can be no certainty at this stage that these discussions will result in any agreement or transaction."

Nokia used to be the world's biggest phone maker, but saw its fortunes severely hit by the rise of Apple and Samsung. The ailing firm sold its smartphone division to Microsoft last April for over $7 billion. Since then it has focused on its long-running telecoms business, building equipment that enables mobile networks to function, as well as its Here mapping service.

Alcatel is a name that will be familiar to phone fans, thanks to the range of Alcatel smartphones and more basic mobiles. However, this mooted merger doesn't offer much hope to Nokia for getting back into the smartphone game -- Alcatel Mobile Phones was a joint effort from Alcatel-Lucent and Chinese firm TCL Communications, with Alcatel-Lucent no longer related to the brand, having sold all its shares.

Rather, Nokia could be looking to Alcatel-Lucent, which was created when US firm Lucent merged with French Alcatel in 2006, to increase the size of its telecommunications offering. "The network infrastructure space is all about scale," Ben Wood, analyst at CCS Insight told CNET, "and right now Nokia is lagging behind rivals Ericsson and Huawei. This deal would help add scale to Nokia's infrastructure business which is essential to its longer term competitiveness."

"However," Wood notes, "the deal does not come without risk. Alcatel-Lucent has had a notoriously tough time over the last few years and the merger with Alcatel added a whole additional level of complexity to the business that Nokia would inherit."