No mention of the handset maker’s Chennai plant, which will mostly go down the contract manufacturing route

U.S software giant Microsoft, on Monday, said that it expected its deal to acquire Nokia’s phone unit, which has been delayed due to a number of regulatory and tax issues, to close on Friday.

The announcement, however, has no mention of Nokia’s Chennai plant, which has been blocked from being part of the deal after becoming the focal point of two separate tax disputes.

“The transaction will be completed this Friday, April 25, when we’ll officially welcome the Nokia Devices and Services business as part of the Microsoft family. The completion of this acquisition follows several months of planning and will mark a key step on the journey towards integration,” the company said in a statement. 

Contract manufacturing

According to people with direct knowledge of the matter, the Chennai plant, in all likelihood, will be operated as a contract manufacturer by Nokia for a certain period of time.

“There is almost no way it can transfer the plant, even if authorities allow it. The number of approvals it would require would take up the days until the transaction closes,” said sources.

This is a controversial point for a majority of the plant’s workers, who have claimed that taking up contract jobs would leave them with less job security. On Monday, a number of the employees boycotted the company’s canteen services as a sign of protest against the insecurity of their situation.

Services agreement

A Nokia spokesperson pointed out that the company continues to weigh its options.

“As there is still time before the closing of the deal, we cannot speculate on possible outcomes at this point. With Chennai, it is worth remembering that we have said we will consider a services agreement with Microsoft should our Indian assets not be able to transfer at the close of the global deal,” the spokesperson said.

The Nokia India Employee’s Union said the management had not informed them of this update, and that they would decide what to do in the next few days.

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