Nokia and Alcatel-Lucent will place 5G, cloud, analytics, IP and software-defined networking at the centre of a new innovation strategy after the two vendors announced plans to merge.
The Finnish vendor agreed a deal worth €15.6 billion to take over its French rival this morning, creating what it described as an "innovation powerhouse".
Among the reasons given for the merger was the changing face of the mobile market, as operators shift towards all-IP, converged networks and the cloud.
The combined entity brings together two portfolios featuring fixed and mobile broadband, IP routing, core networks, cloud applications and services. In addition, Nokia said it would speed up its plans for enabling the IoT.
The two companies employ more than 40,000 people in research and development, mostly at Nokia's FutureWorks and Alcatel-Lucent's Bell Labs divisions.
They spent €4.7 billion on R&D last year, putting the combined company on a par with Cisco, but behind Huawei's €5 billion annual budget.
While the new company will boast a headquarters in Finland, Nokia said it would host two "major" technology sites in France, focusing on small cells, security, 5G and wireless technology. It said it was planning a €100 million long-term investment fund to fuel "digital innovation" in the IoT.
A Nokia statement said: "The company expects to expand R&D employment with the addition of several hundred new positions targeting recent graduates with skills in future-oriented technologies, including 5G."
While Nokia said its HERE mapping service was up for sale, it was keen to hold onto its Nokia Technologies business, which it said remained "a source of superb innovation, expertise and intellectual property".
The deal is set to be completed by the end of June next year.
Rajeev Suri, President and CEO of Nokia, said: "Our innovation capability will be extraordinary, bringing together the R&D engine of Nokia with that of Alcatel-Lucent and its iconic Bell Labs.
"We have hugely complementary technologies and the comprehensive portfolio necessary to enable the internet of things and transition to the cloud. We will have a strong presence in every part of the world, including leading positions in the United States and China."
Michel Combes, Chief Executive Officer of Alcatel-Lucent, added: “A combination of Nokia and Alcatel-Lucent will offer a unique opportunity to create a European champion and global leader in ultra-broadband, IP networking and cloud applications.
"I am proud that the joined forces of Nokia and Alcatel-Lucent are ready to accelerate our strategic vision, giving us the financial strength and critical scale needed to achieve our transformation and invest in and develop the next generation of network technology."