published Apr 10, 2018 4:05:12 PM, by Manuel Baigorri
(Bloomberg) —

Google is in talks to acquire Nokia Oyj’s airplane broadband business as the Alphabet Inc. unit seeks to tap into new services and reach more users by offering in-flight high-speed internet, people familiar with the matter said.

Nokia’s technology could help Google offer a faster alternative to existing Wi-Fi on airplanes, said the people, who asked not to be identified because the deliberations are private. Talks are advanced and an agreement may be reached soon, the people said.

A final decision hasn’t been made and the companies could still decide against a deal, the people said. Representatives for Alphabet and Nokia declined to comment.

Nokia’s LTE A2G cellular-based system creates a direct link between an aircraft and the ground instead of bouncing the signal off of a satellite, enabling in-cabin high-speed internet services using Wi-Fi, according to its website.

Onboard internet has been a consumer pain point for years, with spotty service and weak bandwidth. Yet travelers often pay handsomely for any connectivity on flights. That’s a business opportunity and also a chance for Google to expand its services.

The move could create a wealthy new competitor to Gogo Inc., an existing provider of in-flight internet service. Gogo fell more than 4 percent on the news of the Google-Nokia talks. Chicago-based Gogo had risen as much as 5.6 percent in New York trading Tuesday before closing up 2 percent to $8.86, giving the company a market value of $769 million.

Alphabet rose 1.6 percent, compared with 2.5 percent for the S&P 500 Information Technology Sector GICS Level 1 Index. Nokia’s American depositary receipts rose 2 percent.

Nokia Technology

While Nokia has been developing its in-flight internet technology, the project is a lesser priority than its work on 5G telecom equipment.

Google’s communications group is exploring ways to spread mobile connectivity as strong internet service is crucial to its search engine, YouTube video service and the ads that generate almost 90 percent of the company’s revenue. The business, part of a long-term effort to share wireless spectrum in new ways, oversees existing offerings like the Project Fi wireless business, the Google Voice calling service and a large Wi-Fi network in Starbucks coffee shops.
Updates with Gogo Inc. share price in sixth paragraph.

To contact the reporter on this story: Manuel Baigorri in London at mbaigorri@bloomberg.net To contact the editors responsible for this story: Dinesh Nair at dnair5@bloomberg.net Michael Hytha, Elizabeth Fournier

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