Nokia says Chennai plant is unlikely to be part of Microsoft deal

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Nokia says Chennai plant is unlikely to be part of Microsoft deal
Nokia said that due to an ongoing tax dispute, its Indian mobile phone handset plant was unlikely to be included in a deal due to be concluded on Friday for the sale of its global handset business to Microsoft.

Nokia will instead operate the factory as a contract manufacturing unit for Microsoft after the deal, a spokeswoman for the Finnish company's Indian unit said on Thursday.

(Also see: Microsoft to complete acquisition of Nokia's Devices & Services business on Friday)

"It's highly unlikely that the plant will transfer, given that the (deal) closing with Microsoft is tomorrow," the spokeswoman said. "If the asset doesn't get transferred, we are entering into a service agreement with Microsoft."

(Also see: Nokia's phone business to be renamed Microsoft Mobile, but the 'brand' will live on)

Nokia has yet to agree to conditions set by an Indian court, including payment of a guarantee for potential tax dues in a dispute with Indian authorities, before it transfers the plant to Microsoft. The plant, which Nokia says employs about 6,600 employees, is one of its biggest factories globally.

(Also see: Nokia India appoints Sembian new head of Chennai plant)

Nokia this month offered a voluntary retirement scheme to factory employees.

(Also see: Nokia forcing us to take VRS, allege Chennai factory employees | Nokia offers voluntary retirement scheme to Chennai plant employees)

Nokia lawyers have previously told the Delhi High Court that the company can run the plant as a contract manufacturer in case it is not allowed to be transferred to Microsoft, but not beyond 12 months after closing their EUR 5.4 billion ($7.5 billion) global deal.

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