Nokia Oyj is nearing a deal to sell its Vertu luxury-phone unit to Swedish private-equity firm EQT Partners AB as it divests assets as part of a turnaround plan, according to two people with knowledge of the matter.
The transaction values Vertu at about 200 million euros (US$250 million), one of the people said, declining to be identified as the talks are private. A deal could be announced as early as this week, another person said. Church Crookham, England-based Vertu is known for its jewel-bedecked mobile phones that sell for an average price of more than 5,000 euros.
Nokia is selling assets as CEO Stephen Elop seeks to revive a mobile-phone business that has been devastated by competition from devices running software from Google Inc and Apple Inc. The Espoo, Finland-based company is betting on a software partnership with Microsoft Corp to rebuild its cachet in the critical North American market, where it has struck deals with carriers AT&T Inc and T-Mobile USA to sell its flagship Lumia smartphone.
“Vertu is a bet on a very specific, niche market, though it’s a niche that’s growing,” said Francisco Jeronimo, an analyst at researcher IDC in London.
Its new owner will face the challenge of modernizing Vertu devices’ technology, which has until now been largely based on Nokia’s obsolete Symbian operating system, to compete with devices like Apple’s iPhone, he said.
Representatives at Nokia, EQT and Vertu declined to comment.
Vertu, started by Nokia’s then-chief designer Frank Nuovo in 1998, is the dominant player in the luxury-phone sector, with about 60 percent of the Western European market in 2010, IDC said.
The unit has sought to stand apart from rival offerings like Research In Motion Inc’s Porsche-branded BlackBerry devices with its “concierge” service, a 24-hour, multilingual hotline that assists clients with requests ranging from restaurant reservations to sourcing esoteric gifts.
Vertu, which does not disclose its earnings publicly, saw “high double-digit sales growth” in 2010 and last year, driven largely by demand from emerging markets in Asia and the Middle East, president Perry Oosting said in September last year. The unit operates more than 80 retail stores in locales like Beverly Hills’ Rodeo Drive and Paris’ Rue Royale.