Alcatel's strategic undersea cables unit to be swallowed by Nokia

The Finnish firm unveiled in April the 15.6 billion euro ($17 billion) acquisition of network gear maker Alcatel-Lucent as they aim to better compete with market leader Ericsson and low-cost Chinese powerhouse Huawei [HWT.UL].

Alcatel had previously said it planned to sell a majority stake in Alcatel-Lucent Submarine Networks (ASN) or list the business separately, but in a statement on Tuesday, said it had opted to keep the unit instead.

That means the division, which has facilities in Calais, France and Greenwich, Britain, on the site where the world's first transatlantic cable was manufactured in 1858, will become part of the new Nokia group once the acquisition is complete.

Ministers had envisaged asking the French sovereign fund to take a stake in ASN, to ensure it keeps activities that are strategic to France's surveillance apparatus on French soil.

Asked about possible government concerns, a spokesman for Alcatel-Lucent said France was not opposed to the submarine cable unit being bought by Nokia.

"We constantly exchange with the government, they are aware of our decision," the spokesman said. "This will be part of discussions, but there was no objection," he added.

Michel Combes, Alcatel-Lucent's former CEO, had said in April the undersea cable business would not be sold to Nokia and would either be spun off as a private company or floated in an initial public offering.

France's economy ministry had no immediate comment.

ASN has more than 575,000 kilometers of fiber-optic cable systems deployed worldwide, along with the maintenance of 330,000 kilometers of undersea systems.

(Reporting by Joseph Sotinel and Michel Rose, editing by William Hardy)