Nokia's $7.7 billion Navteq deal clears the EU

July 2, 2008: 12:59 PM ET

By Scott Moritz

Nokia (NOK) successfully navigated European regulatory review, gaining approval to acquire map maker Navteq (NVT).

The No.1 mobile phone maker is expected to close the $7.72 billion deal with the No.1 GPS map maker next week. The move follows the completion of a $4.5 billion merger of GPS device maker TomTom with digital mapper Tele Atlas last month.

Both deals received lengthy European Commission scrutiny as regulators pondered the effects of the two largest GPS map suppliers falling into the hands of device manufacturers. Both deals featured a customer buying a supplier, raising questions about continued supplies to competitors.

For Nokia, the Navteq buy is another step outside its core phone making business and part of an overall effort to be a mobile services shop.

"Navteq will play a key role in our Internet services strategy with world-leading maps and navigation industry expertise, a strong customer base and industry-leading map data and technology platform offering the broadest geographical coverage," said Nokia CEO Olli-Pekka Kallasvuo in a press release Wednesday.

The deal solidifies Nokia's GPS position, allowing it expand on its existing so-called location-based services, like turn-by-turn navigation, local searching to find stores and restaurants within a given vicinity, and location messaging that lets users send others a map that pinpoints where they are. 

Nokia's new service strategy is coming to fruition at a time when growth in global phone sales has started to slow. GPS is one of several services Nokia has targeted for the wireless consumer. The big Finnish phone shop has opened an online music store and signed agreements with record labels to offer songs somewhat similar to Apple's (AAPL) iTunes site.

Nokia also moved into e-mail service as part of its acquisition of IntelliSync two years ago. Nokia hopes to push further into the corporate market held firmly by Research in Motion's (RIMM) BlackBerry. The plan involves mobile connections to Microsoft's Exchange servers.

With nearly 40% of the world's cell phone market, Nokia is very exposed to a slowdown in sales. And next week, Apple's newest iPhone will hit the market. The timing of the service push could help offset the effects of the cooling trend and offer something in the absence of any stunning new phones.

Meanwhile, GPS device giant Garmin (GRMN) has plans to offer a touchscreen phone called the nuvifone as early as this summer. The nuvifone is seen as Garmin's answer to all the smartphone manufacturers that have pushed into GPS services.

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