Nokia's reinvention strategy faces its biggest test

Espoo, Finland

TUCKED away down a corridor at Nokia's headquarters here is a reminder of its 150-year history. A colourful display traces its transformation from a maker of rubber boots in the 19th century to the world's largest manufacturer of cellphones, whose market capitalisation once peaked at almost US$250 billion.

Those high-flying days, though, are long gone.

Nokia failed to adapt to the fast rise of smartphones and eventually sold its faltering handset business to Microsoft. Now, in an effort to remake itself once again, Nokia has turned to manufacturing the telecom equipment that powers the mobile networks of global carriers like Deutsche Telekom and China Mobile.

That strategy will soon face its biggest test when Nokia completes its US$16.6 billion takeover of its Franco-American rival Alcatel-…