French communications equipment maker Alcatel said today it is to create a joint venture with China's TCL Communications to make and sell mobile phone handsets.
TCL is to contribute €55 million ($65.36 million) to the venture and will take an initial 55 per cent, leaving Alcatel with 45 per cent after contributing €45 million and its existing mobile handset business, including about 600 staff.
Alcatel subcontracts the making of its cell phones, so no manufacturing facilities or production staff were included in the deal.
The combination opens the way to Alcatel's eventual withdrawal from the handset business, which would rid it of a loss making activity; for TCL the transaction is another step on the way in its ambition to become a global technology player.
TCL gets access to GSM standard wireless technology, the dominant current standard for mobile phones around the world, without having to sacrifice margins by buying it.
The deal is similar to one done earlier this year in which another branch of TCL and France's Thomson pooled their TV-making assets. Under the deal TCL was set to take full ownership of the new business about 18 months later.
Shares in Alcatel were up 1 per cent at €13.48, while shares in both the Hong Kong and Shenzhen-listed arms of TCL were suspended.