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Nokia plays down problems with compliance after shares fall

FILE PHOTO: The Alcatel-Lucent logo is seen in Calais, France, 7 September 2016. REUTERS/Charles Platiau

HELSINKI (Reuters) – Nokia sought to reduce the risks of an investigation of compliance issues on the Alcatel-Lucent company, after the shares fell sharply on Friday.

The Finnish network equipment maker flagged the issue in its annual report that was released late on Thursday to the U.S. Securities and Exchange Commission. Nokia said it had launched an investigation into certain transactions of the company purchased in 2016.

After the shares fell more than 8 percent in Europe on Friday, Nokia has issued a statement saying the don’t think the issues would have no material impact on the group.

“We believe that it is very likely that any penalties that might apply would be limited and the intangible,” Nokia said.

The shares in respect of some of the earlier losses (5.4 percent at 1545 GMT.

In its annual report, Nokia said that certain practices in the area of the former Alcatel-Lucent company had raised its concerns during the integration process, and it was at the height of the relevant regulatory authorities, without elaboration.

Nokia told Reuters on Friday it was setting up a committee to investigate certain transactions, and its research in a relatively early stage.

The telecom sector has seen a number of relatively large deals in the last couple of years: Nokia itself bought Siemens out of their mobile networks’ joint venture in 2013, and Alcatel-Lucent was a result of the 2006 merger.

However, the integration of acquisitions is cumbersome — these offers are plagued by problems, including trying to save costs in R&D-intensive companies, rivals, steal contracts, and fight over the power.

Additional reporting by Anne Kauranen, editing by Louise Heavens and Elaine Hardcastle

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