Microsoft-Nokia deal likely to close within 20 days, awaiting approval from India and Korea
The Supreme Court on Friday ordered Finnish phone maker Nokia to give a Rs 3,500 crore guarantee in its dispute with the income-tax department before it transfers one of its biggest mobile phone plants and other assets in India to Microsoft Corp.
The ruling upheld a high court verdict over the plant in Chennai, which is the subject of a tax dispute, and was challenged by the Finnish company. The development comes two days after the Income Tax department asked Nokia to provide valuation details of its India assets and later moved the SC to attach Nokia's India assets.
Nokia had already warned it would shut down its Chennai plant if tax dispute is not resolved. Nokia's counsel valued the company's India assets at Rs 2,432 crore, which the SC had rubbished stating the company had produced its own figure.
Pressure is building even for Microsoft, which is close to sealing its $7.2 billion acquisition of Nokia's phone business within 20 days, having passed most levels of approvals, apart from Korea and India. Nokia is fighting a Rs 20,000 crore tax dispute with the Indian government, wherein the Finnish handset maker has conceded to pay only Rs 2,250 crore so far to settle the case, instead of the Rs 3,800 interim payment which Indian tax authorities are willing to settle for. It is now likely that Nokia will file a review petition with the SC, seeking a fresh order.
Reacting to the SC verdict, Nokia said in a statement, "Nokia is disappointed by today's decision. The company strongly believes its offer to the Indian tax department is fair for all sides, allowing its employees and assets to transfer to Microsoft while also providing the necessary financial guarantees. Nokia regrets the anxiety this extended legal process has caused its employees."
The company said it would now consider its next steps.
A source requesting anonymity said, "Nokia has no option but to file a review petition, but beyond that its difficult to say what options they have left. Till then, they will continue with business-as-usual." The Delhi high Court, in its order last December, allowed the sale of Indian assets after imposing certain conditions, which were opposed by Nokia.
Apart from depositing the tax dues in an escrow account, the order demanded that Nokia Finland be bound by the statement that they shall be jointly liable and shall pay tax demand determined under the Indian Act with interest and penalty.
Rajeev Suri may head Nokia
Rajeev Suri, head of Nokia's telecom equipment and services division, Nokia Solutions Networks (NSN), has been tipped to become the Finnish group's next chief executive after Stephen Elop, following the sale of its handset business to Microsoft, as per a local Finnish newspaper report. Suri, who has for some time been considered the leading candidate to become Nokia's first Indian CEO, has been credited for turning around the fortunes of NSN, with a drastic restructuring plan. Given his strong services background, he seems the right man to help Nokia, under Microsoft strengthen its services side, said industry experts. NSN accounts for about 90% of Nokia's sales after the handset division deal.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}