After years of speculation, Nokia NOK1V, -2.30% NOK, -2.68% confirmed Wednesday morning it’s buying its French rival Alcatel ALU, -1.85% ALU, -1.99%for 15.6 billion euros ($16.6 billion) to create one of the world’s largest telecom-gear makers. What are the benefits and the hurdles ahead? Analysts say while there’s definitely long-term potential, there are risks. One thing they’re concerned about is the tricky issue of combining two different cultures, alongside the other typical integration challenges. Read on for some first reactions from analysts to the merger: “[The] bid on Alcatel-Lucent is long-term strategically correct, but highly risky. We are hesitant to its potential for value creation, the true picture will only emerge in a couple of years [...] If Nokia succeeds in this endeavour, a really strong actor will emerge. “However, [...] many similar ventures have resulted in less stellar performance. Having recently been in a turnaround, perhaps the Nokia team can do a better execution than history would suggest.” — Mathias Lundberg, equity analyst at Swedbank. “Other than political and regulatory issues, we believe the two biggest risks to deal execution (not completion) are the cultural difficulties of combining a Finnish-German-French-US corporate. Strong management will be required, and fortunately there are plenty of high-quality managers across the businesses to choose from.” — Gareth Jenkins, analyst at UBS “We believe a ‘full combination’ would leave Nokia with a number of challenges. [...] We also note that Nokia would be reentering an area here that it had decided to exit in the past. “In addition, we see additional risks from significant pension liabilities, expanded integration challenges (notably culture) and government intervention. This is a big price to pay for the trophy assets, namely routing, parts of optical, the IP portfolio and Alcatel’s position in wireless in the U.S. at AT&T and Verizon and its position in China.” — Johannes Schaller, research analyst at Deutsche Bank “While mergers are not without risk, most certainly so in telecom equipment as seen over the past decade, we are positive on Nokia’s aggressive move, one that would make it a strong no. 2 player in many key segments,” Andrew M. Gardiner, analyst at Barclays Sara Sjolin